GDP is often calculated using the expenditures approach, where you add up all spending in four categories: Consumption (C) + Business Investment (I) + Government Spending (G) + Net Exports (Xn). Based on the data you viewed, you can assume that due to the COVID-19 pandemic, the US GDP took the largest hit from which of the expenditure categories?
-Consumption
-Business Investment
Government -Spending
-Net Exports
GDP is often calculated using the expenditures approach, where you add up all spending in four categories: Consumption (C) + Business Investment (I) + Government Spending (G) + Net Exports (Xn). Based on the data you viewed, you can assume that due to the COVID-19 pandemic, the US GDP took the largest hit from which of the expenditure categories? -Consumption -Business Investment Government -Spending -Net Exports
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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GDP is often calculated using the expenditures approach, where you add up all spending in four categories: Consumption (C) + Business Investment (I) + Government Spending (G) + Net Exports (Xn). Based on the data you viewed, you can assume that due to the COVID-19 pandemic, the US GDP took the largest hit from which of the expenditure categories?
-Consumption
-Business Investment Government
-Spending
-Net Exports
Transcribed Image Text:### Figure 3: Housing Starts Fell Drastically, but then Recovered
**Text Explanation:**
Total new privately owned housing starts fell quickly in March and April to numbers not previously seen since 2014-2015, but quickly returned to 2019 numbers by July.
**Graph Description:**
A graph titled "Housing Starts: Total New Privately Owned Housing Units Started" illustrates the drastic decline and subsequent recovery. On the Y-axis, it measures the number of housing units (in thousands) ranging from 0 to 1,800. The X-axis represents the years from 2005 to 2020. The graph shows a sharp decrease in housing starts around early 2020, followed by a rapid recovery that reaches back to the levels seen in 2019 within a few months.
### Figure 4: Real GDP Declined
**Text Explanation:**
Real GDP (adjusted for inflation to 2012 prices in this graph) fell from roughly $19 trillion at the end of 2019 to $17.3 by mid-summer 2020. This represents a roughly -9% change over 6 months.
**Graph Description:**
A graph titled "Real Gross Domestic Product" displays the decline in GDP. The Y-axis measures billions of chained 2012 dollars, ranging from 15,000 to 20,000. The X-axis spans the years from 2005 to 2020. The graph shows a steady increase in GDP from 2009 onwards, peaking around the end of 2019, followed by a notable drop to $17.3 trillion by mid-2020. This graph emphasizes the economic impact over the period mentioned.
**Sources and Credit:**
Both graphs are sourced from "Census, HUD" for the housing starts, and "FRED" for the GDP data, with the website "fred.stlouisfed.org" serving as the data repository.
Transcribed Image Text:### Figure 1: Spending Plunged
**Description:**
Consumer spending decreased significantly by 6.6 percent ($1 trillion) in March 2020 and further plummeted by 12.6 percent ($1.8 trillion) in April. This decline affected spending on both durable and nondurable goods.
**Graph Analysis:**
The graph provided by the Federal Reserve Bank of St. Louis (FRED) illustrates the "Advance Real Retail and Food Services Sales" over time. The x-axis represents the years from 2006 to 2020, while the y-axis shows the monetary value in billions of dollars. There is a noticeable steep decline in 2020, reflecting the sharp decrease in consumer spending.
### Figure 2: Unemployment Surged
**Description:**
The unemployment rate skyrocketed from a low of 3.5 percent in February 2020 to a peak of 14.7 percent in April, before slightly decreasing to 13.3 percent in May.
**Graph Analysis:**
The graph from the Federal Reserve Bank of St. Louis (FRED) displays the "Unemployment Rate" over time. The x-axis marks the years from 2008 to 2020, and the y-axis shows the unemployment rate in percentage points. There is a dramatic spike around 2020, indicating a significant increase in unemployment rates during this period.
**Source:**
Federal Reserve Bank of St. Louis (FRED).
These figures highlight the economic impact during early 2020, showcasing both the substantial drop in consumer spending and the surge in unemployment rates.
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