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QUESTION
Chapter 7 GDP assignment
What is Wealth?
Go to the Bureau of Economic Analysis site, www.bea.gov, and access the BEA interactively by selecting "Data" then "By Economic Account" then "National" then "Gross Domestic Product (GDP)" and then "Interactive Tables: GDP and National Income and Product Accounts (NIPA)." Select "Begin Using the Data" -"Section 1 - Domestic Product and Income" and use Tables 1.1.5 and 1.1.6 to identify the GDP (nominal GDP) and real GDP for the past four quarters then:List the value for each of the last four quarters for both Nominal and Real GDP.
Why was nominal GDP greater than real GDP in each of those quarters? Can Real GDP be greater than nominal GDP? How? Answer all three questions.
Review all available data for ‘Durable Goods’ under Personal Consumption Expenditures at Table 1.1.6; what does the trend of the data indicate about the health of the economy presently? Why? Answer both questions.
Review all available data for ‘Fixed Investment’ under Gross Private Domestic Investment at Table 1.1.6; what does the trend of the data indicate about the health of the economy presently? Why? Answer both questions.
Review all available data for ‘Change in Private Inventories’ under Gross Private Domestic Investment at Table 1.1.6; what does the trend of the data indicate about the health of the economy presently? Why? Answer both questions.
According to the Skidelsky video, what is wealth? Why did the classical economists support business people over landlords and monarchs?
According to the Skidelsky video, who benefits and who does not benefit from growth according to the structuralists and the exploitation theorists? How does this differ from the Washington Consensus?
What part of the story of economic prosperity does GDP do a good job of measuring? How does GDP fall short as a measurement of economic prosperity?
These are multiple questions posed in several items. Your response should answer all parts of all items. The answers for a-e, are about one sentence. Please format your answers as ‘a.’, ‘b.’, etc. . to allow easy identification which part of the question you are answering.video link https://www.youtube.com/watch?v=k39Ulh_8efc&feature=emb_logo
| Subject | Economics | Pages | 5 | Style | APA |
|---|
Answer
Gross Domestic Product
Gross Domestic Product
Wealth is a general term used as an abundance of valuable possessions. Financial assets are also classified as wealth. It can also be stated that wealth is the measure of assets less debts owed. Gross domestic product (GDP) is the total value of everything produced within a country’s borders. Components of Gross Domestic Product include: personal consumer expenditure(C), business investments(I), government spending (G), exports (X) and imports (M). GDP is equivalent to the sum of all its components stated above.
|
Year |
Nominal GDP |
Real GDP |
|
2019 Q3 |
21540.3 |
19141.7 |
|
2019 Q4 |
21747.4 |
19254.0 |
|
2020 Q1 |
21561.1 |
19010.8 |
|
2020 Q2 |
19520.1 |
17302.5 |
*values of GDP in billions of dollars.
- The nominal GDP of the four quarters is greater than the real GDP because the nominal GDP does not reflect the adjustments that result from inflation while the real GDP reflect changes in the actual output. The real GDP can sometimes be higher than the nominal GDP. This scenario signifies that inflation is taking place.
- (i) For durable goods, the value increases progressively in all the quarters between 2018 and 2019 then starts to drop in the first two quarters of 2020. Between 2018 and 2019, the economy is growing as the value of durable goods increase. In 2020, however, the economy is contracting thus the value of durable goods begin to drop notably over the first two quarters of 2020. (ii) This growth and contraction of the economy is influenced by the level of employment. (iii) High unemployment rates result in contracting of the economy while reduced unemployment results in a productive population that contributes to the growth of the GDP.
- (i) For fixed investments, the values increase between 2018 and 2019 and begin to drop in the first two quarters of 2020. (ii) This indicates a growth in the economy between 2018 and 2019 and a contraction of the economy in 2020. (iii) The growth between 2018 and 2019 indicates a higher output which supports income creation as a result. The decline in 2020 indicates reduced output and thus results in lower income creation.
- (i) Change in private inventories keeps fluctuating between 2018 and 2019, while the value drops significantly in 2020. (ii) This shows the difference in value between production and sales over the stated period. (iii) The negative values indicate that the production was greater than sales thus the economy goes into recession. The positive values indicate that the sales were higher compared to production thus resulting in economic growth.
- (i) According to Skidelsky (2019), wealth is an accumulation of valuable possessions. (ii) Classical economies supported business people over landlords and monarch because landlords and monarchs had a claim on resources while business people postponed present satisfactions for future benefits as their time preferences were better suited for economic growth compared to time preferences of monarchs and landlords.
- (i) According to the structuralists and exploitation theorists, the gains from trade are systematically biased against poor countries. Rich manufacturing countries have a cost advantage as technical change benefits the rich countries more than the primary producers who are the poor countries. (ii) This theory differs from the Washington consensus in that the Washington consensus is rather focused on globalization and allowed poor countries to exploit their comparative advantage in cheap and abundant labor unlike the structuralists’ theory which only benefits the rich manufacturing countries.
References
Coscieme, L., Mortensen, L. F., Anderson, S., Ward, J., Donohue, I., & Sutton, P. C. (2020). Going beyond gross domestic product as an indicator to bring coherence to the sustainable development goals. Journal of Cleaner Production, 248, 119232.
Slepov, V. A., Burlachkov, V. K., Danko, T. P., Kosov, M. E., Volkov, I. I., Grishina, O. A., & Sekerin, V. D. (2017). The country's economic growth models and the potential for budgetary, monetary and private financing of gross domestic product growth.
Tacchella, A., Mazzilli, D., & Pietronero, L. (2018). A dynamical systems approach to gross domestic product forecasting. Nature Physics, 14(8), 861-865.