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When thinking about the demand for domestically produced goods in a global economy, it is important to count spending on exports—domestically produced goods that are sold abroad. By the same token, we must also subtract spending on imports—goods produced in other countries that are purchased by residents of this country. The net export component of GDP is equal to the dollar value of exports (X) minus the dollar value of imports (M), (X – M). The gap between exports and imports is called the trade balance    . If a country’s exports are larger than its imports, then a country is said to have a trade surplus    . In the United States, exports typically exceeded imports in the 1960s and 1970s, as shown in [link] (b).

Since the early 1980s, imports have typically exceeded exports, and so the United States has experienced a trade deficit    in most years. Indeed, the trade deficit grew quite large in the late 1990s and in the mid-2000s. [link] (b) also shows that imports and exports have both risen substantially in recent decades, even after the declines during the Great Recession between 2008 and 2009. As noted before, if exports and imports are equal, foreign trade has no effect on total GDP. However, even if exports and imports are balanced overall, foreign trade might still have powerful effects on particular industries and workers by causing nations to shift workers and physical capital investment toward one industry rather than another.

Based on these four components of demand, GDP can be measured as:

GDP  =  Consumption + Investment + Government + Trade balance GDP  =  C + I + G + (X – M)

Understanding how to measure GDP is important for analyzing connections in the macro economy and for thinking about macroeconomic policy tools.

Gdp measured by what is produced

Everything that is purchased must be produced first. [link] breaks down what is produced into five categories: durable goods , nondurable goods , services , structures , and the change in inventories . Before going into detail about these categories, notice that total GDP measured according to what is produced is exactly the same as the GDP measured by looking at the five components of demand. [link] provides a visual representation of this information.

(Source: http://bea.gov/iTable/index_nipa.cfm)
Components of u.s. gdp on the production side, 2014
Components of GDP on the Supply Side (in trillions of dollars) Percentage of Total
Durable goods $2.9 16.7%
Nondurable goods $2.3 13.2%
Services $10.8 62.1%
Structures $1.3 7.4%
Change in inventories $0.1 0.6%
Total GDP $17.4 100%

Percentage of components of gdp on the production side

The pie chart shows that services take up almost half of the chart, followed by durable goods, nondurable goods, structures, and change in inventories.
Services make up over half of the production side components of GDP in the United States.

Since every market transaction must have both a buyer and a seller, GDP must be the same whether measured by what is demanded or by what is produced. [link] shows these components of what is produced, expressed as a percentage of GDP, since 1960.

Types of production

The graph shows that since 1960, structures have mostly remained around 10%, but dipped to 7.7% in 2014, and durable goods have mostly remained around 20%, but dipped in 2014 to 16.8%. The graph also shows that services have steadily increased from less than 30% in 1960 to over 61.9%  in 2014. In contrast, nondurable goods have steadily decreased from roughly 40% in 1960 to around 13.7% in 2014.
Services are the largest single component of total supply, representing over half of GDP. Nondurable goods used to be larger than durable goods, but in recent years, nondurable goods have been dropping closer to durable goods, which is about 20% of GDP. Structures hover around 10% of GDP. The change in inventories, the final component of aggregate supply, is not shown here; it is typically less than 1% of GDP.

Questions & Answers

how discrib the rural development and their four stages
Sheikh Reply
bro History ka question yahaan nhi puchne ka 🤣
ye economics se related ha
1..traditional stage..no science and technology is applied hence poor productionuu.2..the take off stage..some development strategies are initiated eg transport system is improved but the traditional cultural belief still remain .3..the prematurely stage..technological methods of production are appl
applied leading to higher GDP..4..stage of mass consumption..
What is Easiest Formula For National Income?
Tenzin Reply
national income/ agrrigate net value
what do you mean by the supply of goods
sachin Reply
supply of good refer to the total unit of production which is ready to sell at a given price
what is implicit cost
fuseini Reply
any cost that has already occurred but not necessarily shown or reported as a separate expense.
The links don't seem to be working
Scorch Reply
what is taxonomy
wise Reply
how to interprets elasticity
Joseph Reply
what is demand curve
It is the graphical representation of quantity demand of a commodity?
it is the graphical representation of price and quantity demanded of a commodity
what is the difference between positive economics and normative economics.
pauline Reply
It said that positive economics studies the facts, but normative one focus on ought to be.
in another words normative economics focuses on what the fair situation is.
positive economics: wages are 10$ per hour. normative economics: wages should be 25$ per hour.
what is choice
Hamis Reply
what is indifference curve
Misba Reply
It is an alternative combination of consumption of two goods which gives equal level of satisfaction.
good morning guys.. I am Lawrence from Nigeria.. trust am welcome here..
Lawrence Reply
Lovely morning bro... Welcome 💕
ur most welcome lawrence
Welcome back to another session,happy Friday morning
good morning guys I'm Oumar Kromah from Côte d'ivoire am I welcome here
lovely morning bro welcome
i dont understand on economics
i m from pakistan
I am from Nepal
i m Pakistan
Am Gabriel from Ghana
are you ecnomist?
Am Eben Paak from Ghana
Okay.. Nice meeting us
l am James Borbor from Liberia
I am a researcher
you all are ecnomost
ohh nice
re search on economy
what is demand
Milton Reply
Link seems to not work
Jayden Reply
what is an opportunity cost?
Azotikemah Reply
next best alternative cost...
Meaning of Economics
Kamara Reply
It can be define as the practical science that studies human relationship between End's and scare means which have alternative uses in all aspect of human life
what's the meaning of pure and impure
Pure is free from immoral behavior or quality,Impure not clean dirty,filthy containing something that is in pure

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Source:  OpenStax, Principles of economics. OpenStax CNX. Sep 19, 2014 Download for free at http://legacy.cnx.org/content/col11613/1.11
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