The Use of GDP to Measure the Business Cycle

Pages: 3 (958 words) Published: May 14, 2009


Eco/212 – Principles of Economics
University of Phoenix

Describe the use of GDP to measure the business cycle;
‘Gross Domestic Products’ affects the American business cycle, and keeps equilibrium in our economy. GDP measures two things to help in stabilizing our economy. The economy’s income and expenditure, these two tactics are used simultaneously in measuring the annual household income and how much each household spends on goods; this is a continuously repeated cycle in the flow of money that keeps the equality to an equilibrium. The flow of income and expenditure must equal for the economy to become a whole. How this works is income is the same as expenditure for every transaction there is two parties, the seller and the buyer, when a buyer spends a dollar this becomes a dollar income for a seller. For instance Jane Doe spends $100 on for pool service to the seller John Doe for services rendered, this raises the economy of the business cycle $100. () Within the business cycle of economics the services paid for by consumers relate largely to the GDP flow of economy. The dollars spent by consumers flow through the market of production within a business, this allows for paying the wages for labors, fixed costs such as electricity, water , gas, and equipment. The fixed assets that are paid are also used to pay for the labor wages of these businesses. Once the labor wages are paid the recipients go out in the market and purchase more goods that contribute to the economical flow of income and expenditure, which in return contributes to a Gross Domestic Production flow in the business world. ()

Describe the roles of Government bodies that determine National Fiscal Policies;
The knowledge of the governmental roles played in planning of our economical system is very confusing and very over whelming too many Americans. Most citizens don’t understand economics enough to know that the Government has several bodies that are critical too measuring the...

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