Assignment 2: What Is Gross Domestic Product? Essay

996 Words Dec 30th, 2012 4 Pages
Go to the following website: www.bea.gov/index.htm Based on the information contained on the website above, answer the following questions:

1. What was Real GDP for 2009? The Real GDP for 2009 was 13,973.7 (NIPA Tables 1.1.5, 2012)

a. What does GDP tell us? The GDP gives information regarding the country’s economy in regards to total money value on all final goods and services that are produced in the economy over any given time frame - annually or quarterly. Real GDP accounts for price changes especially with inflation whereas nominal GDP does not.

b. How did GDP change from 2008? In the first and second quarter, GDP increased. In the third quarter, GDP started decreasing slightly. However, export and imports of goods
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What caused these changes? Income receipts for the rest of the world decreased and income payments to the rest of the world decreased. Exports and imports of goods and services increased. (Burea of Economic Analysis, 2012)

What was National Income (NI) for 2008? 12,609.1 (NIPA Tables 1.17.5, 2012)

g. What does National Income tell us? The NI tells us the rate of economic growth living standards and any changes in the distribution of income between any groups or in the population. “It is the sum of any wages, profits, rents, and pension payments to people of the nation.” (national income, 2003)

h. What is the difference between GNP and NI? “National income is measured at factor cost as the aggregate earnings of labor and property that arise in the current production of the nation's good and services.” (National Income, 2007)

“Gross national product (GNP) is the market value of the output of goods and services, before deducting depreciation charges and other allowances for the consumption of durable capital goods.” (National Income, 2007)

i. What caused these changes? The financial crisis was created from the housing bubble and the mortgage industry. Additionally, this caused a fall in national income, which lead growth in GDP in negative territory.

2. What was Disposable Income (DI) for 2009? 10,722.4

a. What does Disposable Income consist of? The amount of income left to an individual after taxes have been paid,

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