Measuring Economic Health Memo
Gross Domestic product is (GDP) can act as a gauge for the economy. GDP can usually be based on expenses or income. A correlation is found between GDP and the business cycle because of the relation on income and expenses in the business cycle. The business cycle resembles GDP because the amount of income and the amount of expenses depend on each other in both GDP and the business cycle.
National fiscal policies are necessary to help the economy to stabilize Gross Domestic Product (GDP). National fiscal policies are prepared by government bodies that each have role in the development of policies. The department of treasury manages and constructs fiscal policies. The office of management and budget help develop and review. The office of the president of the United States is in charge of most of the decision-making involved in a fiscal policy and the government accountability office investigates the results of the fiscal policy.
Many people agree that fiscal policies have an impact on the economy’s production and employment. The government taxes employees on their earnings by the government which results in reducing income. When interest rates are down, money is not as tight and consumers purchase more goods, which has a positive effect on production levels. Government spending typically has a positive effect on the economy because as a result of the government expenses many jobs are offered by companies that are paid by the government. Some are more cynical about the idea that fiscal policies affect the economy positively. For the most part, people see the relation between employment and taxing, but many think that demand does not correlate with production and employment therefore making it a temporary adjustment to help the economy, but a questionable adjustment in the long run. (tutor2u)
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