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PERSONAL CONSUMPTION EXPENDITURES: The official item in the National Income and Product Accounts maintained by the Bureau of Economic Analysis measuring household consumption expenditures on gross domestic product. Personal consumption expenditures are far and away the largest and tends to be the most stable of the four expenditures, averaging about 65-70% of gross domestic product. The other official expenditures included in the National Income and Product Accounts are gross private domestic investment, government consumption expenditures and gross investment, and net exports of goods and services.
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Lesson 10: Gross Domestic Product | Unit 5: Issues
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Page: 24 of 25
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Topic:
What It Doesn't Do
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GDP and related measures are not perfect.- GDP is only an indicator of economic activity. Because it requires interpretation and analysis it is subject to misinterpretation and misanalysis.
- GDP is an aggregate measure for the economy. It measures total production, but it does not indicate who receives the production, the distribution of production.
- GDP does not measure the satisfaction of wants and needs. GDP can increase even though welfare does not increase, or even decreases. GDP might even decrease even though welfare is greater.
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RECESSIONARY GAP, KEYNESIAN MODEL The difference between equilibrium aggregate production achieved in the Keynesian model and full-employment aggregate production that occurs when equilibrium aggregate production is less than full-employment aggregate production. A recessionary gap, also termed a contractionary gap, is associated with a business-cycle contraction. The prescribed Keynesian remedy for a recessionary gap is expansionary fiscal policy. This is one of two alternative output gaps that can occur when equilibrium generates production that differs from full employment. The other is an inflationary gap.
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General Electric is the only stock from the original 1896 Dow Jones Industrial Average remaining in the current index.
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"Democracy is based on the conviction that man has the moral and intellectual capacity . . . to govern himself with reason and justice. " -- Harry Truman, 33rd U.S. president
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SBDC
Small Business Development Center
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