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Nominal GDP: Real GDP Add in library

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Questions:

• Why was nominal GDP greater than real GDP in each of those quarters?

• What was the percentage change in Nominal GDP for the most recent quarter compared to the previous quarter? What was the percentage change in Real GDP for the two quarters?

 

Answer:

Analysis Of The Table :

 

NOMINAL GDP

REAL GDP

     

Personal expenditures

The initial quarters of the year 2013 and 2014 witnessed a more or same expenditure with rise in the year 2015

This showed an increase in the initial quarters of2013 and showed an increase in all the quarters of 2013 and 2014

Domestic Private Investment ( Gross)

increased in the initial months of 2015

this showed an increasing trend from the year 2013 till the second quarter of 2015

Exports of services and goods

This has shown negative trends in all the years.

this has also projected negative figures in all the years.

 

 

Report:

The economy of the United States has shown a wide difference in the nominal GDP and the real GDP. Inflation in the country has led to the increase of the nominal GDP at an accelerating rate than the real GDP.  The nominal GDP of the nation is calculated by the nation's level of output multiplied with the prevailing prices in the economy. The nominal GDP is also likely to increase even is the nation thinks of producing a level of output as he did the year earlier.  This is because of the inflation in the economy will cause the products to increase its value in the next year. The rise in the real GDP is not witnessed due to inflation rather it is a control for the inflation.  Over time we have noticed that there has been an increase in the real domestic product as well. This was due to the growth in the economy. The productivity also increases with the increase in normal GDP.  The annual growth rate of GDP was high in the month of July 2014 and again in the month of February also the growth rate was also same that is 2.9.  The percentage of GDP that was accounted in the year 2013 was 2.2 percentages (Baumohl, 2005). The fourth quarter of the year 2013 witnessed a growth in the business spending by the people. There was no credit that could be given to the government. The United States output grew at the rate of 3.2 percentages in the 2013’s fourth quarter. This was 1.9 percentages in the entire year. The growth in the real GDP of 4.1 percentages shows that the growth of the fourth quarter about the third quarter.  The increase has reflected in the increase in the individual expenditure of consumption, increase in the level of exports, increase in the level of spending by the private sector in the inventories and the increased spending by the local government (Mankiw, 1997). The gains were affected by the lower spending by the federal government and fixed investment in the residences. The rate was also affected due to the enhanced imports made by the country. There was a difference in the percentages of the nominal and real GDP. The fourth quarter of the year 2013 has noticed a positive growth due to the growth in the exports of services and other goods.

 

References:

Baumohl, B. (2005). The secrets of economic indicators. Upper Saddle River, N.J.: Wharton School Pub.

Mankiw, N. (1997). Monetary policy. Chicago: University of Chicago Press.

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