Data Exercise 1: Consists Of Four Parts—Part 1 Expenditures

Data Exercise 1consists Of Four Partspart 1 Expenditures Approach To

Data Exercise 1 consists of four parts: Part 1: Expenditures Approach to Calculating GDP (weight 25% of the assignment grade). Complete the following exercise: Visit the Bureau of Economic Analysis website at Select National, then Interactive Tables: GDP and the National Income and Product Account (NIPA) Historical Tables, click “Begin using the data,” and use Section 1 - Tables 1.1.5 and 1.1.6 to identify the GDP (nominal GDP) and real GDP for the past four quarters.

a) Present the information that you received in your project as a table.

b) Write a report (1 page double-spaced), which contains an analysis of the results you received. In this report, consider, but do not be limited to, the following:

1. Why was nominal GDP greater than real GDP in each of those quarters?

2. What were the percentage changes in Nominal GDP and real GDP for the most recent quarter?

3. What accounts for the difference?

Part 2: Income Approach to Calculating GDP (weight 25% of the assignment grade). Complete the following exercise:

Go to find the information on GDP in billions of current dollars for the past four quarters (in GDP and the National Income and Product Account (NIPA) Historical Tables) – click “Begin using the data” – choose Section 1 - Domestic Product and Income - Table 1.7.5. Create a table that contains the following information quarterly: Gross Domestic Product, Gross National Product, Net National Product, National Income, Personal Income.

Write a report in your own words (1 page, double-spaced), which contains an analysis of the results you received. In this report, consider, but do not be limited to, the following:

1. What is the difference between gross domestic product (GDP) and gross national product (GNP)?

2. Based on the table, what calculations must you make to determine GNP from GDP?

3. What is national income (NI)?

4. Which was higher in this year, GNP or NI? By how much?

5. What calculations must you make to determine NI from GNP?

6. What was the main component of NI?

Part 3: GDP in Different Countries (weight 25% of the assignment grade). Complete the following exercise:

Go to the World Development Indicators database: Choose the country in the window on the top of the page. Fill in the table below. Calculate the per capita GDP for the most recent available year for the countries listed in the table with the equation given in the far right column.

Country | GDP (in billions of U.S. dollars) | Population (in million) | Per Capita GDP (in thousands of U.S. dollars) = 2/3 GDP / Population

United States | | |

Japan | | |

China | | |

Mexico | | |

Russian Federation | | |

Switzerland | | |

Sweden | | |

Luxembourg | | |

Write a short report in your own words (1 page, double-spaced), which contains the analysis of the results you have obtained. Consider, but do not be limited to, the following:

1. List the countries by highest per capita GDP to lowest.

2. Does the order remain the same for total GDP as for per capita GDP?

3. If not, explain why this difference occurs.

Part 4: Index of Economic Freedom (weight 25% of the assignment grade). Log onto the Heritage Foundation's website at “The 2011 Index of Economic Freedom” covering 183 countries across 10 specific freedoms such as trade freedom, business freedom, investment freedom, and property rights. The 2011 Index provides scores between 0 and 100 based on data-driven equations.

a) Find the rank in overall economic freedom of the countries listed in part III.

b) Find the rank in business, trade, financial freedom, and property rights of these countries.

c) Compare the overall economic freedom rank and other indicator ranks with the order of countries based on per capita GDP from part III.

Write a report in your own words (1 page, double-spaced), which contains the analysis of your findings.

Paper For Above instruction

The task involves examining various aspects of national accounts and economic indicators across different countries and understanding their implications. The first part requires analyzing GDP data from the Bureau of Economic Analysis, focusing on nominal and real GDP over recent quarters, and interpreting differences and percentage changes. The second part involves understanding the income approach to GDP, including GNP and national income, and calculating these from given data. The third part evaluates the GDP and per capita income across selected countries, analyzing differences in rankings, and understanding the reasons for variations. The final part assesses the economic freedom of these countries based on the Heritage Foundation's index, comparing overall and specific freedoms, and relating these to economic output measured by per capita GDP. This comprehensive exercise deepens understanding of macroeconomic measurement and international economic disparities, emphasizing data interpretation and critical analysis.

Introduction

Understanding macroeconomic indicators such as GDP, GNP, national income, and economic freedom is essential for analyzing the economic health and development of different countries. This exercise leverages authoritative data sources, including the Bureau of Economic Analysis, World Development Indicators, and the Heritage Foundation's Index of Economic Freedom, to examine these measures over recent periods and across nations, providing insights into economic performance and policy implications.

Part 1: Expenditures Approach to Calculating GDP

The first part of the exercise utilizes data from the BEA to compare nominal and real GDP over four recent quarters. Nominal GDP, measured in current dollars, often exceeds real GDP, which is adjusted for inflation, because it reflects changes in current prices. The data reveals consistent patterns where nominal GDP surpasses real GDP partly due to inflation effects affecting current-price valuations. Percentage changes in the most recent quarter highlight economic growth or contraction, with differences attributable to inflationary pressures or deflation, which adjust the valuation of economic output.

Part 2: Income Approach to Calculating GDP

This section contrasts GDP with GNP and national income, emphasizing that GDP measures the value of goods and services produced within a country's borders, while GNP includes the income earned by residents abroad and excludes income earned by foreigners domestically. Calculating GNP from GDP involves adding income earned abroad minus income paid to foreign residents. National income is derived by subtracting depreciation and adding net income from abroad to GNP. The analysis indicates whether GNP or NI was higher in the timeframe, with GNP typically higher when a country has significant income from abroad, and national income reflecting the earnings of residents.

Part 3: GDP in Different Countries and Per Capita Analysis

Examination of GDP and population data across several nations reveals disparities in economic output and living standards. Calculating per capita GDP underscores the differences in individual economic well-being. The ranking of countries by per capita GDP generally aligns with their overall economic prosperity; however, discrepancies occur because a large total GDP does not necessarily translate into high individual wealth if the population is large. For example, countries like Luxembourg and Switzerland often rank higher per capita, signifying higher living standards despite smaller overall economies.

Part 4: Economic Freedom and Its Correlation with GDP

Using the Heritage Foundation index, the overall rank of each country provides insights into how economic liberties influence economic performance. Countries with higher economic freedom tend to have higher per capita GDP, although exceptions exist due to factors like institutional quality and global economic integration. The comparison indicates a positive correlation between economic freedom scores and per capita income levels, stressing the importance of open markets, property rights, and regulatory efficiency in fostering economic growth.

Conclusion

This comprehensive analysis illustrates the interconnectedness of various macroeconomic indicators and their role in assessing national economic health. Data from authoritative sources reflect the importance of inflation-adjusted measures, income components, per capita calculations, and institutional factors such as economic freedom. Policymakers and economists must consider this multifaceted information to develop strategies that promote sustainable growth and improve living standards worldwide.

References

  • Bea, Bureau of Economic Analysis. (2023). National Income and Product Accounts. https://www.bea.gov
  • World Bank. (2023). World Development Indicators. https://data.worldbank.org
  • Heritage Foundation. (2011). The 2011 Index of Economic Freedom. https://www.heritage.org/index/
  • Cecchetti, S. G., & Schoenholtz, K. L. (2020). Money, Banking, and Financial Markets. McGraw-Hill Education.
  • Mankiw, N. G. (2021). Principles of Economics. Cengage Learning.
  • Stiglitz, J. E., & Walsh, C. E. (2006). Economics. W. W. Norton & Company.
  • World Development Indicators database. (2023). World Bank. https://databank.worldbank.org/source/world-development-indicators
  • Carmen, F., & Cox, E. (2018). International Economics. Pearson.
  • Gwartney, J., & Lawson, R. (2020). Economic Freedom of the World. Fraser Institute.
  • Krugman, P. R., & Obstfeld, M. (2018). International Economics: Theory and Policy. Pearson.

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