Exercise Set 7
NATIONAL INCOME ACCOUNTING

I. Objectives

1. To understand the components of aggregate expenditure
2. To compute gross domestic product and gross national product

II. Data

• Input the values for various items in the U.S. national income accounts (in billions of dollars; rounded to the nearest billion).
• Compute gross domestic product and gross national product.
• Click on Gimme GDP! to verify your answers.

Spending by the household sector
Durable goods:	Nondurable goods:	Services:
Spending by the business sector
Non-residential investment:	Residential investment:	Changes in business inventories:
Spending by the govt. sector
Federal govt expenditures:	State and local govt expenditures:
Spending by the external sector
Exports of goods and services:	Imports of goods and services:
Net factor income from abroad
Income receipts from the rest of the world:	Income payments to the rest of the world:






Consumption

Investment

Govt expenditure

Net exports

GDP

GNP

III. Questions 

1. Most recent quarter = ____________.
2. Obtain data for the relevant items in the national income accounts for the most recent quarter (in billions of current dollars) and compute the following: C, I, G, (X-IM) and GDP. Show your computations.
3. Compute the proportion of each component of spending in GDP:
   1. Consumption accounts for ______ % of GDP.
   2. Investment accounts for ______ % of GDP.
   3. Government expenditure accounts for ______ % of GDP.
   4. Exports account for ______ % of GDP.
   5. Imports account for ______ % of GDP.
4. Spending on services accounts for _____% of personal consumption expenditures.
5. The U.S. has a [ deficit / surplus ] of $ ________ billion in the balance of goods account
6. The U.S. has a [ deficit / surplus ] of $ _________ billion in the balance of services account.
7. On the BEA website, go to Table 1.7.5. Relation of Gross Domestic Product, Gross National Product, Net National Product, National Income, and Personal Income
   1. For the latest quarter, obtain "Income receipts from the rest of the world" and "Income payments to the rest of the world".
   2. Compute Gross National Product.
8. Go to Table 1.1.6 Real Gross Domestic Product, Chained Dollars.
   1. For the latest quarter, real GDP is $ __________ billion.
   2. Why is this different from the nominal GDP computed in Question 3?
9. How much did the economy grow in the latest quarter (compared to the preceding quarter, expressed in annual rates)? Use data for real GDP for the two quarters from Table 1.1.5.
1. To obtain annual rates, remember to multiply the percent quarterly change by 4.
2. Verify your answer from Table 1.1.1. Percent Change From Preceding Period in Real Gross Domestic Product.