Mesuring_Economic_Health

Economics is a challenging thing to understand, all the different terms, formulas and policies can be a bit overwhelming. However a lot of it is common knowledge without anyone realizing it. When a friend of yours who works at retail store tell you that she needs to work overtime you automatically assume business is doing good. The simple statement is an Economic one and rather right on the button as well. As you read over this memo you will realize just how connected everything in Economics is. An Economic term that sounds much more complicated then it is would be Gross Domestic Product which is the ending total value of all products and services rendered by a company during a given period of time. Unlike the business cycles which are changes of the economy over long periods of time. These periods of time can fall into five stages, growth, peak, recession, trough, and recovery. You are able to use Gross Domestic Product to measure the business cycle. When Gross Domestic Product is rising this would be considered a period of growth for the business cycle. When the Gross Domestic Product falls tremendously this is a sign the business cycle is in a recession, when the Gross Domestic Product begins to rise again this is a sign the business cycle is in recovery (Hubbard & O'Brien, 2010, Chapter 26). Both Gross Domestic Product and the business cycles are directly affected by the government’s fiscal policies. Our government controls its spending by abiding by the Fiscal policies they set forth. There are several government groups that determine these fiscal policies, which guarantees that the policies are not one sided. The office of Management and Budget develops and analysis the fiscal policies, the Department of Treasury manages and constructs the policy, then the Government Accountability Office audits the policies. Once the policies have been audited the Office of the President of the United States has the final say on the policies. When the policies have been approved the Department of the Treasury is responsible for implementing the policies as well (Investopdia, 2010). These policies are the puppet masters to our societies overall financial standings. It is a domino effect. The government can shift productivity by increasing or decreasing tax levels and public spending. This would curb inflation which would increase employment and help maintain the value of money. If there is an increase in sales the Gross Domestic Product will increase which means there is a growth in the business cycle. After reviewing these simple things about our Economic structure, you should realize how often you may make Economic references and how simple it would be for you determine our countries Economic health because you know more then you realize. References: Hubbard, R. G., & O'Brien, A. P. (2010). Economics (3rd ed.). : Prentice hall. Investopdia. (2010). What is Fiscal Policy'. Retrieved from http://www.investopedia.com/articles/04/051904.asp