Measuring_Economic_Wealth

Measuring Economic Wealth The Gross Domestic Product or the GDP is what most countries use to measure their economic health. The GDP affects the American business cycle, and keeps equilibrium in the economy. The GDP measures two things that help stabilize the economy, the income and expenditures. 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 equilibrium. The flow of income and expenditure must equal for the economy to become a whole. There are four stages in the business cycle: contraction, trough, expansion, and peak (About.com, 2010). The GDP affects the business cycle because it is equal to a number of factors. The money spent by consumers it’s used by businesses to pay wages, 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 (About.com, 2010). Fiscal policy is government spending policies that influence macroeconomic conditions. These policies affect tax rates, interest rates, and government spending, in effort to control the economy (Dictionary.com, 2010). The Internal Revenue Service (IRS) is a department of the U.S. Government. The IRS is in charge of ensuring all of the American people pay their taxes. The Federal Trade Commission (FTC) supervises credit and loans and regulates debt collection and they also help the citizens of the United States against identity theft (Federal Trade Commission, 2010). The Department of Treasury, Office of Management and Budget, Office of the President of the United States, and Government Accountability Office are responsible for determining national fiscal policies. The Department of Treasury executes four critical tasks in addition to constructing and managing the fiscal policy. They formulate, implement and recommend economic, financial, tax and fiscal policies and serve as financial agents for the U.S. Government and also enforce laws and manufacture coins and currency. The Office of Management and Budget (OMB) helps the President in analyzing, developing, and executing fiscal policies and programs. OMB assists in the development of all regulatory, procurement, budgeting, policy, legislative, and management issues on behalf of the President. Office of the President of the United States decides the fiscal policies. This office consists of the President’s immediate and support staff members. Government Accountability Office (GAO) audits the fiscal policy, evaluates, and serves as the investigative arm of the United States Congress. The way the government attempts to manage the economy through taxation, spending, and borrowing for the moment, causes stipulation on general labor, employment, and associated resources through government spending. Employment has the tendency to go up for the short- term but after an evaluation of the long term effect, there is no difference. Employment will eventually return to its expected stages. Reference About.com. (2010). About.com US Economy. Retrieved from http://useconomy.about.com/od/grossdomesticproduct/p/GDP.htm Dictionary.com. (2010). Fiscal Policy. Retrieved from http://dictionary.reference.com/browse/fiscal+policy Federal Trade Commission. (2010). About the Federal Trade Commission. Retrieved from http://www.ftc.gov/ftc/about.shtm