Economics

Economics

Measuring Economic Health
Ashleigh Addis
Eco/212
November 30, 2011
Darrin DeReus

Measuring Economic Health
The gross domestic product (GDP) is the total value of all the goods and services produced over a period of time. It is essentially the size of an economy (Wikipedia, 2011). The Business cycle is refers to the fluctuation of our economy over certain amounts of time. The business cycle consists of four phases; the contracting, expansion, peak and recessions. It is not predictable and can happen at any given moment. GPD and the business cycle coincide and reflect on one another. Simply put, if the gross domestic product is rising then there will be an increase in the business cycle. Visa-versa, if the gross domestic product is declining there will be a decrease in the business cycle.
The roles of the government body that determine national fiscal policies are department of treasury, office of management and budget, the president of the United States, and government accountability office. Department of treasury manages the fiscal policy. The management and budget office develops the fiscal policy as well as analyzes it. The president makes the decisions regarding the policy and the government accountability office audits the policy.
The fiscal policy has a great effect on our economy’s production and employment. By simply increasing taxes it’ll affect everyone involved. The employees will see a decrease in their net pay and employers will see a possible increase in the amount of money they have to put out to produce their products. Another example where the fiscal policy can effect production and employment is when the interest rates go up or down. When the interest rates go up it will be more expensive to produce items and employment will essential decrease as well. Changes in the government spending and taxes can both affect our economy both positively and negatively. An example where government spending benefited our economy was during WWII....