Question

After reading Chapter Seven, make sure to study the course documents about it within the "Modules" button. Then, by 11:59 p.m. on Tuesday, July 28, post your answer on the "Reply" line (below) to the following question: What is (just) one specific example of how Gross Domestic Product (G.D.P.) could decrease in the U.S. during this calendar year (2020)?

Before posting your answer, make sure to read what other students have posted, to make sure your example is different than theirs. Your posting should be at least two paragraphs long, and demonstrate how (just) one of the components of the "Expenditures Approach" could decrease and thereby make the total measured output of the country lower, as these terms are described within Chapter Seven. And make sure your postings don't have any spelling errors in them (words underlined in red within Canvas by the auto-spell checker).

Answer 1

Answer

GDP (as per expenditure method) = C + I + G + (X-M)

where, C: Consumption expenditure,

I: Investment expenditure,

G: Government spending, and

(X-M): Exports minus imports, that is, net exports.

As per the data of 2019,

In 2019, U.S. GDP was 70% personal consumption, 18% business investment, 17% government spending, and negative 5% net exports.This is as per the Bureau of Economic Analysis. The U.S. GDP could fall in the year 2020 if personal consumption of the citizens reduces to quite an extent. The current pandemic has caused a similar situation where the consumption has fallen drastically. This will lead to a fall in the GDP in 2020.