Part 1:Expenditures Approach to Calculating GDP (weight45% of the assignment grade)

BEA estimates the nation's GDP for each year and each quarter. But new GDP statistics are released every month. Why? Because for each quarter, BEA estimates GDP three times. Theadvance estimate, coming about a month after the quarter's end, is an early look based on the best information available at that time. Thesecond estimateandthird estimateeach incorporate additional source data that weren't available the month before, improvingaccuracy.(www.bea.gov).

BEA publishes estimates of levels at annual rates (for most series) for ease of comparisons with related and historical data. For example, in its February 2,2004personal income and outlays release, BEA estimated that personal income for December 2003 was $9,335.8 billion at an annual rate. This is easily compared to BEA's estimates of personal income for the fourth quarter of 2003 ($9,312.6 billion, at an annual rate) and for the entire year of 2003 ($9,187.4 billion).(www.bea.gov).

Published

January 13, 2006

Complete the fol

Visit the Bureau of Economic Analysis website atwww.bea.gov. From the drop-down menu under "Data", click on "by Economics Account".

Then click on "National"> "Gross Domestic Product > and "Full Release and Tables". (To find "Full Release and Tables" you need to scroll down the pageto the section "Current Release".

Use table 3 (Gross Domestic Product: Level and Change from Preceding Period). Tables are located at the end of the Release, so you need to scroll all the way down tothe tables.

The left columns are nominal GDP (and its components)and the right half represents real GDP (chained 2012 dollars).

a)Create the tablethat containsthe following information for the lastavailablequarter.Please note that using the data for previousyearsand/or previous estimates is not allowed

You need this information frombothparts of the table 3-(nominal GDP (and its components) from left columns and real GDP (chained 2012 dollars) from the right part of the table 3).Omit the intermediate lines found in Table3on the web site.

Gross domestic productPersonal consumption expendituresGross private domestic investmentNet exports of goods and servicesGovernment consumption expenditures and gross investment

b)Calculate the percentage(the proportion)of each category in nominalGDPandinreal GDP.

Using Nominal GDP:

[Personal consumption expenditures / NominalGDP]*100%

[Gross private domestic investment / NominalGDP]*100%

[Net exports of goods and services / NominalGDP]*100%

[Government consumption expenditures and gross investment/ NominalGDP]*100%

And using Real GDP:

[Personal consumption expenditures /RealGDP]*100%

[Gross private domestic investment /Real]*100%

[Net exports of goods and services /RealGDP]*100%

[Government consumption expenditures and gross investment/RealGDP]*100%

Present the information that you received (a) and(b) as a table(s) in your project.

2.Make a report

In this report consider, but do not be limited to the following:

1.Why was the nominal GDP greater than the real GDP? By how much?2.GDP is composed ofa number ofcategories. What category makes up the largest portion of GDP? What category makes up the smallest portion of GDP?3.What is "Gross private domestic investment"? What does gross private domestic investment measure?4.What is "Net exports of goods and services"? Why it is negative?5.In theleft part of thetable3 (nominal GDP)find the category "National defense". How much was the National defense for the last quarter? Calculate percentage of National defense out of "Government consumption expenditures and gross investment". Calculate percentage of National defense out of GDP.6.Please analyze and discuss the significance of the data that you received for this Data exercise.7.What was learnedlearned from this exercise.

Part 2:Income Approach to Calculating GDP (weight45% of the assignment grade)

Complete the following exercise:

Go tohttp://www.bea.gov/

Visit the Bureau of Economic Analysis website atwww.bea.gov. From the drop-down menu under "Data", click on "by Economics Account". Then click on "National", "Gross Domestic Product, and "Full Release and Tables". Use table 7 (Relation of Gross Domestic Product, Gross National Product, and National Income)and table 8 (Personal Income and its Disposition).

1.Create the tablethat containsthe following information forthe lastquarterwhere datarequired for this exerciseis available.

Omit the intermediate lines found in Tables7and 8on the web site.

GrossdomesticproductGrossnationalproductNetnationalproduct(you should calculate it as Grossnationalproductminus Consumption of fixed capital)NationalincomePersonalincomePersonal Disposable IncomePersonal Savings

Present the information that you received in your project.

2. Make a report.In this report consider, but do not be limited to the following:

1.What is the difference between gross domestic product (GDP) and gross national product (GNP)? What is the difference in what GDP measures compared to GNP?2.Based on the table, what calculations must make to determine GNP from GDP?3.What is national income (NI)? What does NI measure?4.Which was higher in this year, GNP or NI? By how much?5.What calculations must you make to determine NI from GNP?6.NI is composed ofa number ofcategories. What category makes up the largest portion of NI?7.What calculations must you make to determine Personal Income from National Income?8.What calculations must you make to determine Personal Disposable Income and Personal Savings?9.Please analyze and discuss the significance of the data that is received for this Data exercise.