Why Measuring GDP?
• Determining the health of an economy. • Comparisons over time. • Reference for formulating public policy. • U.S GDP Analysis • The U.S economy is the largest national economy in the world, with an estimated GDP of $14.264 trillion (2008). • What contribute to this high number? • U.S. GDP and Its Components 2008 70% 14% 21% -5% Consumption Investment Government Purchases Net Export • CONSUMPTION • EXPLANATION • Consumption is spending by households on goods and services . • Goods include households spending on durable goods and nondurable goods. • Services include such intangible items. • Quick Quiz Section • Question : Which is the largest components contributing to the U.S. GDP? • Answer : Consumption (occupies approximately 70% of the total nation’s GDP). • • From 2004 to 2007, the percent change in consumption decreased slightly. However, from 2007 to 2008, it decreased dramatically from 2.8% to 0.2% • • In the fourth quarter of 2008, the total of consumption decreased 235.6 billi
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