Relationship between real GDP and the Business cycle
According to their assessment, the GDP is divided into two parts: real and nominal. The real GDP is based on current prices, whereas the nominal GDP is based on recurring costs. The two GDPs differ in several ways, including their method of calculation. The GDP does not fully reflect a country's well-being because it does not account for technical advancements.
The GDP is the economic value of the goods and services that a country is capable of producing in a given fiscal year. Depending on the technique of estimation, there are two types of GDP. The consumption expenditure refers to the monetary value of goods and services purchased and used during a given period. Investment applies to the physical aspects of stock added at a given time, and it includes; housing and factories construction as well as the built machinery (Bureau of Economic Analysis, 2017). Government purchases involve the acquisition of both goods and services by the government. As a result, it consists of the purchase of products and payment of services such as wages. The value of net exports underlines the difference between the amount spent on the imported goods and the domestic goods at a given time.
USA’s GDP report for 2017 first Quarter (Bureau of Economic Analysis, 2017).
United States GDP
Last
Previous
Highest
Lowest
Unit
GDP Growth Rate
3.20
3.10
16.90
-10.00
percent
[+]
GDP Annual Growth Rate
2.30
2.20
13.40
-4.10
percent
[+]
GDP
18569.10
18036.65
18569.10
543.30
USD Billion
[+]
GDP Constant Prices
17163.89
17031.09
17163.89
2084.60
USD Billion
[+]
Gross National Product
17352.84
17198.04
17352.84
2098.40
USD Billion
[+]
Gross Fixed Capital Formation
2915.80
2898.46
2915.80
1215.60
USD Billion
[+]
GDP per capita
52194.90
51722.10
52194.90
17036.90
USD
[+]
GDP per capita PPP
53272.50
52790.00
53272.50
36543.08
USD
[+]
GDP From Agriculture
174.50
149.50
235.10
123.30
USD Billion
[+]
GDP From Construction
818.60
810.40
818.60
528.70
USD Billion
[+]
GDP From Manufacturing
2218.60
2208.50
2218.60
1679.40
USD Billion
[+]
GDP From Mining
321.20
327.00
476.10
197.60
USD Billion
[+]
GDP From Public Administration
2457.50
2439.40
2457.50
1705.00
USD Billion
[+]
GDP From Services
13259.70
13092.20
13259.70
8469.60
USD Billion
[+]
GDP From Transport
588.20
574.50
588.20
357.50
USD Billion
[+]
GDP From Utilities
296.60
288.00
296.60
193.00
USD Billion
[+]
Difference between the real Gross Domestic Product and Nominal GDP
Real GDP refers to the microeconomic measure about the economic output value adjusted for price changes such as inflation. On the other hand, Nominal GDP refers to the Gross Domestic Product that is evaluated for the current period under consideration (Investopedia, 2017). Therefore, the nominal GDP considers the current market prices. Whereas the real GDP involves the adjustments of values for inflation, the nominal does not. Hence, the nominal GDP is always higher than the actual GDP.
Relationship between real GDP and the Business cycle
The Business cycle plays an integral role in underlining the trends of the GDP in the United States of America (Investopedia, 2017). The recession periods underline instances of falling off the real GDP while the expansions highlight the periods of a rise in the real GDP in the US economy.
References
Bureau of Economic Analysis. (2017, December 21). National Income and Product Accounts. Retrieved from Bureau of Economic Analysis: https://bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm
Investopedia. (2017, September 18). Gross Domestic Product - GDP. Retrieved from Investopedia: https://www.investopedia.com/terms/r/realgdp.asp"
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