Calculating GDP | Macroeconomics

Learning ObjectivesDescribe how GDP it is measured as a component of total expenditure (demand)Explain how gross domestic product can be broken down and measured as different types of productThe Expenditure Approach: GDP Measured by Components of DemandIf we know that GDP is the measurement of everything that is produced, we should also ask the question, who buys all of this production? This demand can be divided into four main parts:consumer expenditure (consumption)investment expendituregovernment expenditure on goods and servicesnet export expenditureTable 1 shows how these four components of demand added up to the GDP in 2016.Table 1. Components of U.S. GDP in 2016: From the Expenditure SideComponents of GDP (in trillions of dollars)Percentage of TotalConsumption$12.868.7%Investment$3.016.3%Government$3.317.6%Net Exports-$.50-2.7Exports$2.212.0%Imports–$2.7–14.7%Total GDP$18.6100%Source: http://bea.gov/ Table 1.1.5 Gross Domestic ProductFigure 1 provides a visual representation of...