Many components measure economic health. Gross Domestic Product helps to measure the business cycle, certain government bodies determine fiscal policies, and the fiscal policies chosen affect the economies production and employment. Every decision made by the government is crucial and majorly affects everyone.
Gross domestic product (GDP) is the market value of all final goods and services produced in a country during a period of time, usually within a year. This is done to measure the economy’s activity so adjustments can be made where needed. When the time comes to file taxes, businesses send a report to the government, which helps to track the GDP. The Bureau of Economic Analysis (BEA) makes reports on the GDP every three months to help keep a consistent eye on the economy.
Many government bodies determine national fiscal policies. Some of which are the Federal Reserve, the Internal Revenue Service (IRS), the Department of Treasury, the Office of Management and Budget, and the Government Accountability Office. The Federal Reserve regulates the supply of money to help control inflation. The Internal Revenue Service helps individuals with his or her taxes. The Internal Revenue Service’s mission is to “Provide America's taxpayers top quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all” (IRS, 2010, para. 2). The Department of Treasury helps to maintain the economy by creating jobs and promoting financial economic growth. The Office of Management and Budget analyzes the fiscal policy and the Government Accountability Office audits the fiscal policy.
To create a strong economy, the government uses three fiscal policy tools. The tools are government purchases, taxes, and transfer payments. Government purchases include purchasing items such as aircraft, traffic lights, and salaries for teachers. Such purchases help to create and maintain... [continues]
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