Part 1: Expenditures Approach Calculating GDP

Part 1:Expenditures Approach Calculating GDP

In this essay, we shall show how the Nominal GDP and Real GDP are different from each other. In the same way, we aim to compare both, and establish a correlation between them in order to offer a thorough analysis of the subject. In the same way, we will answer a few question concerning the changes in the GDP throughout four quarters. To do it, we shall employ data retrieved from the U.S. National Bureau of Economic Analysis (BEA)
Nominal GDP Table
In this chart, we shall show the nominal GDP of the country in the past four quarters.
2014 2015
II III IV I
17238.2 17599.8 17703.7 17665
Source: U.S. Bureau of Economic Analysis (2015)
Real GDP Table
2014 2015
II III IV I
15831.7 16010.4 16205.6 16294.7
Source: U.S. Bureau of Economic Analysis (2015)
Analysis of the GDP Tables
It is important to assert a difference between Real, and Nominal GDP. The first accounts for the real values, and it is adjusted for inflation. Nominal values, are not, and result in higher figures than those on the Real GDP. That is why, the figures in the nominal GDP appear bigger, quarter after quarter.
Accounting for the percentile change in the Real GDP in Quarter IV of 2014, and Quarter I of 2015, we can say that there is been an increment of 0,5% between the last quarter of the past year and the first quarter of the current.
Given the fact that real GDP captures the differences of GDP across states and reflect the differences between all the products they produce, the increment in GDP might be good for the country’s economic growth.

However, given the fact that Real GDP does not capture the state differences, we cannot assess ourselves on the health of each state’s economy.
In the same way, given the fact that GDP is a macroeconomic measure that is adjusted for economic changes such as inflation or price changes; we can say that in the first quarter of 2015, consumers have had a money that has a higher value than the money they had in the last quarter of 2014.
References
U.S. Economic Accounts. (2015). Retrieved June 9, 2015, from http://www.bea.gov/