Measuring Economic Health Memo

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Measuring Economic Health Memo
Shavonde Chase
University of Phoenix
ECO212: Economics
Joe Timmerman
November 28, 2010

Measuring Economic Health Memo
The main goal of most macroeconomists is to ensure that people are as happy as possible. Because happiness is numerically impossible to gauge, economists developed the idea of using the level of services and goods being produced and consumed as the most precise monetary technique to estimate economic health. Economic health is thought to be understood by learning the significance of gross domestic product (GDP), fiscal policies’ effect on the economy, and the roles of government agencies that determine national fiscal policies. All of these are essential in understanding the proper mechanism of the economy. GDP oftentimes is positively correlated with the standard of living. The GDP is an assessment of a country's economic output. Economic output is the market value of final goods and services made within the perimeter of a country in any given time and has a direct effect on the business cycle. The business cycle is short-run fluctuations of GDP around its trend path. The trend path reflects the long-term growth or development of the economy. When real GDP falls toward a low point, the economy is said to be in recession and when it expands toward a high point, the economy is in a boom. Negative growth rates characterize former periods and positive growth rates characterize latter periods. A slowdown occurs when the growth rate of GDP falls below the trend level but remains positive. Four government agencies establish national fiscal policies. Congress established the Department of the Treasury to manage government income. The main duties of the Department of the Treasury consist of managing finances, collecting taxes, paying bills, producing currency, managing accounts and public debt, supervising banks, implementing federal finance and tax laws, and investigating and prosecuting tax evaders. The Office of...
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