homework1answersspring2008 - Economics 302 Spring 2008...

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Economics 302 Spring 2008 Homework #1 Homework will be graded for both content and neatness. This homework requires the use of Microsoft Excel. 1) The following table is taken from the Bureau of Economic Analysis data release on quarterly GDP from 1/30/2008. Figures in Billions of Dollars 2007-I 2007-II 2007-III 2007-IV Gross domestic product 13552 13768.9 13970.4 14081 Personal consumption expenditures 9540.5 9674 9785.7 9928 Durable goods 1074 1074.7 1081.6 1088 Nondurable goods 2759.4 2822.7 2846.3 2903.7 Services 5707.1 5776.6 5857.8 5936.3 Gross private domestic investment 2117.3 2139.1 2162.9 2109.8 Fixed investment 2118.9 2133.9 2127.5 2118.3 Nonresidential 1431.4 1469.1 1500.2 1532.1 Residential 687.5 664.9 627.3 586.2 Change in private inventories -1.6 5.1 35.4 -8.5 Net exports of goods and services -714.1 -714.2 -694.7 -727.5 Exports 1549.9 1598.7 1685.7 1727.1 Imports 2264 2312.9 2380.4 2454.6 Government expenditures 2608.3 2670 2716.5 2770.7 Federal 946.6 969.5 990.3 997.1 State and local 1661.7 1700.5 1726.2 1773.6 a) Fill in all the blanks in the table. (While this can be done by hand, you will find it easier to use Excel). Don’t forget to calculate GDP. Answers are shown in the table in bold. In each case, we simply sum the appropriate values. Consumption = Durables + Nondurables + Services Investment = Fixed Investment + Change in inventories (and Fixed Investment = Non-residential fixed investment+ Residential fixed investment) Net Exports = Exports – Imports Government Expenditures = Federal Expenditures + State and Local Expenditures GDP = C + I + G +NX b) In their release, the BEA points out that their GDP data is “seasonally adjusted at annual rates”. Why is it important to seasonally adjust quarterly data? What patterns might emerge in US quarterly GDP data if it is not seasonally adjusted? Measuring GDP using the expenditure approach, we might be worried that people have different spending patterns during different quarters. In the U.S., 4th quarter GDP is generally higher than the other three quarters because of consumer spending on winter holidays, and 1st quarter GDP is often a bit lower due to consumers using their income
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