Table 9: Gross Domestic Product by Expenditure Categories at Current Prices, 2015-16 to 2018-19

(Million Taka)

2015-16 2016-17 2017-18 2018-19

Domestic demand (1)+(2) 18,138,721 20,781, 861 24,395,224 27,089,356

Consumption (1) 13,000,335 14,753,559 17,365,869 19,062,661

Private 11,979,247 13,568,893 15,935,308 17,468,248

69.13% 68.7% 70.8% 68.7%

General Govt. 1,021,088 1,184,667 1,430,561 1,594,413

5.9% 5.99% 6.3% 6.3%

Investment (2) 5,138,386 6,028,302 7,029,355 8,026,695

29.65% 30.51% 31.23% 31.57%

Private 3,983,470 4,563,583 5,235,183 5,985,825

Public 1,154,916 1,464,719 1,794,172 2,040,870

Net Export (3)-(4) -806,625 -1,033,704 -1,945,084 -1,554,170

Exports (3) 2,885,169 2,970,857 3,330,925 3,895,909

Imports (4) 3,691,794 4,004,561 5,276,009 5,450,079

Gross Domestic Exp. 17,332,096 19,748,157 22,450,140 25,535,186

GDP at m.p.(5) 17,328,637 19,758,154 22,504,793 25,424,826

Growth 14.02% 13.9% 12.97%

Statistical Discrep.(6) -3,459 9,997 54,653 -110,360

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a. Nominal GDP for year 2010

Nominal GDP for 2010 = 2010 Price of Automobile X 2010 Quantity of Automobile + 2010 Price

of Bread X 2010 Quantity of Bread

= 60000 X 120 + 20 X 400000

= 8,000,000

Real GDP for 2010 = 2000 Price of Automobile X 2010 Quantity of Automobile + 2000 Price of

Bread X 2010 Quantity of Bread

= 50000 X 120 + 10 X 400000

= 6,400,000
GDP Deflator for 2010 = Nominal GDP for 2010 / Real GDP for 2010

= 8000000/6400000

= 1.25

Fixed Weight CPI for 2010 = (2010 Price of Automobile * 2000 Quantity of Automobile + 2010
Price of Bread * 2000 Quantity of Bread) / (2000 Price of Automobile * 2000 Quantity of
Automobile + 2000 Price of Bread * 2000 Quantity of Bread)

= (60000 * 100 + 20 * 500000) / (50000 * 100 + 10 * 500000)

= 1.27
8. Consider how each of the following events is likely to affect real GDP. Do you think the change in real GDP
reflects a similar change in economic well-being?

a) A hurricane in Florida forces Disney World to shut down for a month.

Real GDP falls because Disney does not produce any services while it is closed. This corresponds to a
decrease in economic well-being because the income of workers and shareholders of Disney falls
(the income side of the national accounts), and people’s consumption of Disney falls (the
expenditure side of the national accounts).

b) The discovery of a new, easy-to-grow strain of wheat increases farm harvests

Real GDP rises because the original capital and labor in farm production now produce more wheat.
This corresponds to an increase in the economic well-being of society, since people can now
consume more wheat. (If people do not want to consume more wheat, then farmers and farmland
can be shifted to producing other goods that society values.)

c) Increased hostility between unions and management sparks a rash of strikes.

Real GDP falls because with fewer workers on the job, firms produce less. This accurately reflects a
fall in economic well-being.

d) Firms throughout the economy experience falling demand, causing them to lay off workers

Real GDP falls because the firms that lay off workers produce less. This decreases economic well-
being because workers’ incomes fall (the income side), and there are fewer goods for people to buy
(the expenditure side).

e) Congress passes new environmental laws that prohibit firms from using production methods
that emit large quantities of pollution.

Real GDP is likely to fall, as firms shift toward production methods that produce fewer goods but
emit less pollution. Economic well-being, however, may rise. The economy now produces less
measured output but more clean air; clean air is not traded in markets and, thus, does not show up
in measured GDP, but is nevertheless a good that people value.
f) More high-school students drop out of school to take jobs mowing lawns.

Real GDP rises because the high-school students go from an activity in which they are not producing
market goods and services to one in which they are. Economic well-being, however, may decrease.
In ideal national accounts, attending school would show up as investment because it presumably
increases the future productivity of the worker. Actual national accounts do not measure this type
of investment. Note also that future GDP may be lower than it would be if the students stayed in
school, since the future work force will be less educated.

g) Fathers around the country reduce their work-weeks to spend more time with their children.

Measured real GDP falls because fathers spend less time producing market goods and services. The
actual production of goods and services need not have fallen, however. Measured production (what
the fathers are paid to do) falls, but unmeasured production of child-rearing services rises.