1. GDP Calculations Slides By John Dawson and Kevin Brady Begin CoreEconomics, 2e Interactive Examples To navigate, please click the appropriate green buttons. (Do not use the arrows on your keyboard) Material from this presentation can be found in: Chapter 15

2. Answer GDP Calculations To answer the questions in this exercise, use the following data for the U.S. economy during the third quarter of 2010, annually adjusted, in billions of dollars. Compensation of Employees 8,033.0 Personal Consumption Expenditures10,336.3 Gross Private Domestic Investment 1,907.2 Corporate Profits 1,640.1 Proprietors’ Income 1,059.5 Exports 1,848.9 Imports 2,399.4 Government Purchases of Goods and Services 3,022.2 Net Interest 719.6 Rental Income 303.8 QUESTIONS: 1.Calculate net exports for the economy during the third quarter of 2010. 2.Using the Expenditures Approach to GDP, calculate GDP for the economy using the figures provided above. 3.Using the Income Approach to GDP, calculate GDP for the economy using the figures provided above. Interactive Examples

3. The End GDP Calculations ANSWERS: 1.Net Exports = Exports − Imports = 1,848.9 − 2,399.4 = −550.5 (in billions of dollars). 2. According to the Expenditures Approach, GDP = Consumption + Investment + Government Purchases + Net Exports = 10,336.3 + 1,907.2 + 3,022.2 + (−550.5) = 14,715.2 (in billions of dollars). 3. According to the Income Approach, GDP = Compensation of Employees + Rental Income + Net Interest + Corporate Profits + Proprietors’ Income = 8,033.0 + 303.8 + 719.6 + 1,640.1 + 1,059.5 = 11,756.0 (in billions of dollars). The discrepancy between the two approaches is attributed to Miscellaneous Adjustments and Adjustments to National Income (not shown in this table). Back Interactive Examples