By looking at the data above : Gross Domestic Product, Private Final Consumption
ID: 1223616 • Letter: B
Question
By looking at the data above : Gross Domestic Product, Private Final Consumption Expenditure in the US, and Personal Consumption Expenditures: Non Durable Goods from 2003-2013.
1. Describe with details each of the series:
a. Gross Domestic Product
b. Private Final Consumption Expenditure in the US
c. Personal Consumption Expenditures: Non Durable Goods from 2003-2013.
d. What are the implications of each component?
2. Describe the relationships:
a. between Gross Domestic Product and Private Final Consumption Expenditure in the US.what are the impacts?
b. between Gross Domestic Product, and Personal Consumption Expenditures: Non Durable Goods from 2003-2013. What are the impacts
c. Explain the implication for these relationships about macroeconomic environments
FRED Gross Domestic Product Private Final Consumption Expenditure in United States© Personal Consumption Expenditures: Nondurable Goods 18,000 1 6,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 fred.stlouisfed.org myf.red/g/5f6JExplanation / Answer
(1)
(a) GDP has started increasing from about $11,500 in 2003, then reached the first peak at about $15,000 in 2008, and after a mild drop in 2009, again started rising upto the second (and higher) peak at about $17,500 in 2014. Therefore, GDP has shown an increasing trend along the period.
(b) The same trend is visible for Private final consumption. It has started increasing from about $7,500 in 2003, then reached the first peak at about $10,000 in 2008, and after a mild drop in 2009, again started rising upto the second (and higher) peak at about $12,000 in 2014. Therefore, ratio of private final consumption expenditure to GDP has remained the same at roughly 67% each year.
(c) Personal consumption (non-durable) too is increasing over time, with an exception in 2009, from about $1,500 in 2003 to about $2,750 in 2014.
(d) GDP reflects the total value of all final goods and services produced within the economy during the year. Private consumption demand is the total consumption of all goods and services by individuals during the year, while personal consumption expenditure on non-durable goods is a component of private consumption expenditure component, which reflects the growth in consumption of capital goods.
Note: First question is answered.
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