10. Calculating GDP: (1)The Expenditure Approach GDP = C + I + G + NX Durable good + Non-durable goods + Services (C) (+) Residential Investment + Non-residential Investment + Changes in inventories (I) (+) Federal gov. + State gov. + Local gov . (G) (+) (Export – Import) (NX) Gross Domestic Product (GDP)
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14. Components of U.S. GDP, 2002: The Expenditure Approach BILLIONS OF DOLLARS PERCENTAGE OF GDP Personal consumption expenditures (C) 7303.7 69.9 Durable goods 871.9 8.3 Nondurable goods 2115.0 20.2 Services 4316.8 41.3 Gross private domestic investment (l) 1543.2 14.8 Nonresidential 1117.4 10.7 Residential 471.9 4.5 Change in business inventories 3.9 0 Government consumption and gross investment (G) 1972.9 18.9 Federal 693.7 6.6 State and local 1279.2 12.2 Net exports (EX – IM) 423.6 4.1 Exports ( EX ) 1014.9 9.8 Imports ( IM ) 1438.5 13.8 Total gross domestic product (GDP) 10446.2 100.0 Note: Numbers may not add exactly because of rounding. Source: U.S. Department of Commerce, Bureau of Economic Analysis.
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16. Calculating GDP: (2) The Income Approach National income (+) Depreciation (+) (Indirect taxes – subsidies) (+) Net factor payments to the rest of the world (+) others GDP
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18. Table: Components of U.S. GDP, 2002: The Income Approach BILLIONS OF DOLLARS PERCENTAGE OF GDP National income 8,199.9 80.3 Compensation of employees 6,010.0 58.9 Proprietors’ income 943.5 7.3 Corporate profits 748.9 7.3 Net interest 554.8 5.4 Rental income 142.7 1.4 Depreciation 1,351.3 13.2 Indirect taxes minus subsidies 739.4 7.2 Net factor payments to rest of the world 11.1 0.1 Other 96.1 0.9 Gross domestic product 10,205.6 100.0
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22. Table: GDP, GNP, NNP, National Income, Personal Income, and Disposable Personal Income, 2002 DOLLARS (BILLIONS) GDP 10,205.6 Plus: receipts of factor income from the rest of the world + 342.1 Less: payments of factor income to the rest of the world 353.2 Equals: GNP 10,194.5 Less: depreciation 1,351.3 Equals: net national product (NNP) 8,843.2 Less: indirect taxes minus subsidies plus other 643.3 Equals: national income 8,199.9 Less: corporate profits minus dividends 332.6 Less: social insurance payments 731.2 Plus: personal interest income received from the government and consumers + 439.1 Plus: transfer payments to persons +1,148.7 Equals: personal income 8,723.9 Less: personal taxes 1,306.2 Equals: disposable personal income 7,417.7
23. Table: Disposable Personal Income and Personal Saving, 2002 DOLLARS (BILLIONS) Disposable personal income 7,417.7 Less: Personal consumption expenditures 7063.5 Interest paid by consumers to business 204.3 Personal transfer payments to foreigners 31.3 Equals: personal saving 118.6 Personal savings as a percentage of disposable personal income: 1.6%
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25. Calculating Nominal & Real GDP TABLE: A Three-Good Economy (1) (2) (3) (4) (5) (6) (7) (8) GDP IN GDP IN GDP IN GDP IN YEAR 1 YEAR 2 YEAR 1 YEAR 2 IN IN IN IN PRODUCTION PRICE PER UNIT YEAR 1 YEAR 1 YEAR 2 YEAR 2 YEAR 1 YEAR 2 YEAR 1 YEAR 2 PRICES PRICES PRICES PRICES Q 1 Q 2 P 1 P 2 P 1 x Q 1 P 1 x Q 2 P 2 x Q 1 P 2 X Q 2 Good A 6 11 $.50 $ .40 $3.00 $5.50 $2.40 $4.40 Good B 7 4 .30 1.00 2.10 1.20 7.00 4.00 Good C 10 12 .70 .90 7.00 8.40 9.00 10.80 Total $12.10 $15.10 $18.40 $19.20 Nominal GDP in year 1 Nominal GDP in year 2
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