Question

News release

In May 2017, real personal consumption expenditures (PCE) was $11,845 billion and the PCE deflator was 112.257.

In June 2017, real personal consumption expenditure was $11,850 billion and personal consumption expenditure was $13,305 billion.

Source: BEA, July 31, 2017

Calculate personal consumption expenditure in May 2017 and the PCE deflator in June 2017.

Was the percentage increase in real personal consumption expenditure greater or smaller than that in personal consumption expenditure?

Personal consumption expenditure in May 2017 was

$nothing

billion.

>>> Answer with a whole number.

The PCE deflator in June 2017 was

nothing.

>>> Answer to 1 decimal place.

The percentage change in real personal consumption expenditure between May 2017 and June 2017 was

nothing

percent.

>>> Answer to 2 decimal places.

>>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign.

The percentage change in personal consumption expenditure between May 2017 and June 2017 was

nothing

percent.

>>> Answer to 2 decimal places.

>>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign.

The percentage change in real personal consumption expenditure is

▼

than the percentage change in personal consumption expenditure.

Answer #1

PCE deflator = (personal consumption expenditure/ real personal consumption expenditure) *100

- Thus personal consumption expenditure in May 2017 is :

(PCE deflator * real personal consumption expenditure) / 100

= (112.275 * 11845)/100

= 1329897.38 /100

= $13298.973 Billion

2. PCE deflator in June 2017 is:

= (13305/11850)*100

= 1.12278 *100

= 112.2

3. % increase in real personal consumption expenditure is given by:

(real PCE_{June} - real PCE_{May}) / real
PCE_{May} *100

= (11850- 11845)/11845 *100

= 5/11845 *100

= .000422 *100

=.042%

Now,

% increase in personal consumption expenditure is given by:

(PCE_{June} - PCE_{May}) / PCE_{May}
*100

= (13305- 13298.973)/ 13298.973 *100

= 6.027 / 13298.973 *100

= .000453 *100

=.045%

Thus the % increase in real personal consumption expenditure was smaller than the % increase in personal consumption expenditure from May to June.

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