Measuring Economic Health
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Measuring Economic Health
Describe the Use of Gross Domestic Product (GDP) to Measure the Business Cycle
The Gross Domestic Product (GDP) is what countries use to measure the economic health of the country. According to Investopedia.com (2010)), “The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory,” (para, 1). The business cycle is the level of fluctuation within the economy. There are five stages of the business cycle that are: growth, peak, recession, trough, and recovery (Investopedia.com, 2010). The GDP affects the business cycle because it is equal to a number of factors. First is private consumption and consumer spending in a nation’s economy. The second is government spending. The third is the country’s businesses spending on capital and the fourth is the nation’s total net exports.
Describe the Roles of Government Bodies That Determine National Fiscal Policies
Fiscal policy is the change in government spending, taxes or incentives for private investments that stimulate or slow down the economy. The country’s economy is balanced by government bureaus who decide national fiscal policies. Interest rates, taxes, and government spending are ways that these bureaus try to deal with regulating the economy.
The Internal Revenue Service (IRS) is a department of the American Government that all working Americans are well aware of. This bureau of the government is in charge of making sure that everyone pays their share of taxes. They also help incorporate new tax laws. The Federal Trade Commission (FTC) oversees anti-trust in mergers, credit and loans, and regulate debt collection. The FTC is there to protect citizens from identity theft. According to FTC.gov (n.d.), “The Federal Trade...
Describe the Use of Gross Domestic Product (GDP) to Measure the Business Cycle
The Gross Domestic Product (GDP) is what countries use to measure the economic health of the country. According to Investopedia.com (2010)), “The monetary value of all the finished goods and services produced within a country's borders in a specific time period, though GDP is usually calculated on an annual basis. It includes all of private and public consumption, government outlays, investments and exports less imports that occur within a defined territory,” (para, 1). The business cycle is the level of fluctuation within the economy. There are five stages of the business cycle that are: growth, peak, recession, trough, and recovery (Investopedia.com, 2010). The GDP affects the business cycle because it is equal to a number of factors. First is private consumption and consumer spending in a nation’s economy. The second is government spending. The third is the country’s businesses spending on capital and the fourth is the nation’s total net exports.
Describe the Roles of Government Bodies That Determine National Fiscal Policies
Fiscal policy is the change in government spending, taxes or incentives for private investments that stimulate or slow down the economy. The country’s economy is balanced by government bureaus who decide national fiscal policies. Interest rates, taxes, and government spending are ways that these bureaus try to deal with regulating the economy.
The Internal Revenue Service (IRS) is a department of the American Government that all working Americans are well aware of. This bureau of the government is in charge of making sure that everyone pays their share of taxes. They also help incorporate new tax laws. The Federal Trade Commission (FTC) oversees anti-trust in mergers, credit and loans, and regulate debt collection. The FTC is there to protect citizens from identity theft. According to FTC.gov (n.d.), “The Federal Trade...