Gross Domestic Product (GDP)

EconEye Admin

2 years ago

Real GDP in the United States increased at an annual rate of 1.4 percent in the first quarter of 2024, down from 3.4 percent in the fourth quarter of 2023.

Compared to the fourth quarter, the deceleration in U.S. real GDP primarily reflected decelerations in consumer spending, exports, and government spending. These movements were partly offset by an acceleration in residential fixed investment. Source: Bureau of Economic Analysis, June 27, 2024

Answer the following questions to check your understanding of the story.

What does the BEA mean by “the deceleration in real GDP”?

a) The decrease in the growth rate of all the aggregate expenditure components of real GDP.

b) The decrease in the level of real GDP.

c) The decrease in a growth rate of real GDP.

d) The decrease in the level of all the aggregate expenditure components of real GDP.

Wrong! - Does the newsclip report the change in the growth rate or the level of real GDP? And did the growth rates of all the aggregate expenditure components of real GDP decrease?

Well Done! - Real GDP growth rate decreased from 3.4 percent in 4^th quarter of 2023 to 1.4 percent in 1^st quarter of 2024.

Which components of aggregate expenditure are not identified as having accelerated or decelerated in the first quarter of 2024?

a) Compensation of labor.

b) Business fixed investment and inventories.

c) Government transfer payments.

d) Expenditure on existing residences.

Wrong! - GDP is the value of final goods and services produced in a given period. Are government transfer payments and the compensation of labor expenditures on final goods and services? Are existing residences produced in the current period?

Good Job! - The expenditure missing from the BEA’s report is business fixed investment expenditure and inventories.

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