The Gross Domestic Product

By,

Name

Course

Tutor

College

Date

2019	Gross GDP	Real GDP	2020	Gross GDP	Real GDP
Gross Domestic Product	21,747.40	19,254.00	Gross Domestic Product	21,479.5	18,780.3
Personal consumption expenditures	14,759.20	13,353.70	Personal consumption expenditures	14,545.30	13,004.70
Gross Private domestic investments	3,732.60	3,413.30	Gross Private domestic investments	3,908.8	982.10
Net exports of goods and services	-549.80	-861.50	Net exports of goods and services	-805.3	-1,121.10
Government consumption expenditures and gross investments	3,805.30	3,337.50	Government consumption expenditures and gross investments	3,830.30	3,316.80

Using Nominal GDP

Gross domestic products = 21479.5/42958.6*100 =50%

Personal consumption expenditure =14,545.3/42958.6*100 =33.9%

Gross private domestic investment =3908.8/42958.6*100 =9.1%

Net exports of goods and services =-805.3/42958.6 =-1.9%

Government consumption expenditures and gross investments =3830.3/42958.6 =8.9%

Using Real GDP

Gross domestic products = 18780.3/34962.8*100 =53.7%

Personal consumption expenditure =13004.7/34962.80*100 =37.2%

Gross private domestic investment =982.1/34962.8*100 =2.8%

Net exports of goods and services = -1121.1/34962.80*100 =-3.2%

Government consumption expenditures and gross investments =3316.8/34962.80*100 =9.5%

	Nominal GDP	Real GDP
Gross Domestic Product	50%	53.7%
Personal consumption expenditures	33.9%	37.2%
Gross Private domestic investments	9.1%	2.8%
Net exports of goods and services	1.9%	-3.2%
Government consumption expenditures and gross investments	8.9%	9.8%

When comparing the country’s output in terms of real domestic product and nominal economic product, the nominal domestic product is always higher than the real output. This is because, for the country to derive its real domestic product, some adjustments are made regarding inflation. Since inflation is a positive number, in this case, the real product results are very low compared to the nominal domestic product (Gogas. P. &Pragidis. I, 2015). The inflation adjustment is the cause of the differences. The difference can be computed as 42,958.6 – 34,962.8 =7995.80. Thus, the nominal domestic product exceeds the real one by 7,995.80. The difference is due to the adjustment for inflation.

The gross domestic product comprises several categories as per this assignment. These categories include the personal consumption expenditures, the gross domestic products, the gross private domestic investment, the net exports of services and goods, and the government consumption expenditures and gross investment. These items total 42,958.60 as given above. Among the items, the gross domestic products contribute the highest proportion by 21, 479.50 of the total products. The net exports of goods and services contribute the lowest proportion and it is a negative figure. The category only contributes -805.30 of the total amount. All the other items are positive while the net exports of goods and services are negative. The net exports of goods and services are found by subtracting all the country’s imports from its exports. The result of the computation gives the net exports of goods and services of that specific country. The value that is obtained from the computation is always negative since the country’s imports are more than the exports. Countries try as much as possible to avoid negative trade balances.

From the table, the National defense for the last quarter was 820.30. This is the value for the 2020 last quarter. As a percentage of the government consumption expenditures and investment, the following computations are relevant. The National defense value is given by 820.30 whereas the government consumption expenditure and investment are 3,880.30. As a percentage of the latter, the National defense will be = 820.3/3,880.3*100 =21.1%.

Also, one can obtain the percentage of the National defense by using the gross domestic products. From the above table, the GDP is given by 21,479.50. As a percentage of GDP, the National defense will be computed as = National defense/GDP*100. This is given as 820.30/21,479.50*100 =38.2%. From the two calculations, the result obtained using the government consumption expenditures and investment is lower than the one obtained using the gross domestic products. The difference between the two computations is 17.1%. It is good to note that the National defense is part of the government consumption expenditures and investments since it is an institution that is under the government. The first computation provides the portion of the National Defense in the government consumption expenditures and investment. From the calculation, the National defense makes only 21.1% of the total consumption made by the government. The second arithmetic presents the portion of the National Defense in gross domestic product. From the calculation, the defense makes 38.2 of the gross domestic product of the country. This analysis is very important since it gives an overview of the amount of the national defense as part of the government spending and also as part of the GDP (Van Zanden. J. L &Leuwen, 2012).

	Q1	Q2	Q4 (available last quarter)
Gross domestic product	21,561.10	19,520.10	21479.5
Gross national product	21,804.3	19,672.0	–
Net national product	18,295.3	16,137.60	–
National product	18,405.50	16,151.0	–
Personal income	18,951.00	20,457.30	19,576.1
Disposable personal income	16,698.60	18,360.80	17,349.40
Personal savings	1595.30	4770.80	2325.60

One can measure the output of a country in several ways. For instance, one can measure the output using the gross domestic product. Besides, the same output can be measured using the gross national product (GNP). The gross domestic product measures all the country’s value of goods and services within the borders and it does not exclude those produced by those people who are not its citizens. For GDP, both the citizens and non-citizens are contributors to the country’s gross domestic products since they operate from that specific country. Gross national product on the other hand excludes non-citizens. It also measures the country’s value of goods and services but does not consider those products provided by citizens of other countries that reside in that same country. However, gross national product considers products of the country’s citizens that are abroad (Consta et al., 2014, p.283). The difference between the two parameters is net national income from abroad that is added to the GDP to make it GNP. One should calculate the net income from abroad to determine the GNP from the GDP.

A country’s national income is the total value of its final outputs of all the new products produced in one year. It measures the flow of output of products produced by the country’s economy in monetary terms. In the year 2020, the GDP was more than the national income by 83,731 -52,069.7 =31,661.30. Among the components of the national income, compensating for employees makes the highest proportion. The personal income is computed by adding the transfer payments to the national income. The resultant value is the personal income. Personal disposable income is the amount of income that remains after deducting the taxes. Personal savings on the other hand is part of the disposable income (Beraman. Y., et al 2016)

References

Berman, Y., Ben-Jacob, E., & Shapira, Y. (2016). The dynamics of wealth inequality and the effect of income distribution. PloS one, 11(4), e0154196.

Costanza, R., Kubiszewski, I., Giovannini, E., Lovins, H., McGlade, J., Pickett, K. E., … & Wilkinson, R. (2014). Development: Time to leave GDP behind. Nature News, 505(7483), 283.

Gogas, P., & Pragidis, I. (2015). Are there asymmetries in fiscal policy shocks?. Journal of Economic Studies.

Van Zanden, J. L., & Van Leeuwen, B. (2012). Persistent but not consistent: The growth of national income in Holland 1347–1807. Explorations in economic history, 49(2), 119-130.