December 4, 2010
Measuring Economic Health Memo
Gross Domestic Product is used to measure business cycles. Gross Domestic Product is a monetary measure of all services and goods sold within a country annually. It measures the quantity of things a society produces. Fluctuation in growth of Gross Domestic Product is reflected by business cycle. Unemployment, inflation, and interest rate are three elements to Gross Domestic Product that effect the business cycle. The business cycle is a sequence of economic activity typically characterized by recession, fiscal recovery, growth, and fiscal decline (Reference for Business, 2007). When the country’s Gross Domestic Product increases it causes an expansion in that county’s business cycle and when there is a decrease in a country’s Gross Domestic Product the business cycle goes into a recession like it is in our country currently.
There are several roles the government bodies play in determining national fiscal policies and all roles have huge effects on the economy’s production and employment. Fiscal policy refers to the federal government and government bodies make decisions fiscal policies to maintain the country’s economy. Taxation, government spending, and interest rates are roles government bodies deal with. Congress or the President needs are to approve fiscal policies. They have used fiscal policies to fight recession. Fiscal policies is constructed, managed, and implemented by The Department of Treasury. Implemented fiscal policies in the United States impact the behavior of Americans and alter production and employment.
Fiscal policies effect the economy’s production and employment. Government spending reduces productivity and increases unemployment. Excessive government spending makes everybody poorer (Joint Economic Committee, 2010). During a recession period government spending increases and taxes are lowered, which is... [continues]
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