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Measuring Economic Health (week #4)

Keith Johnson

Principles of Economics - ECO/212

February 2, 2011

Instructor: Robert Boggs

Measuring Economic Health

If one was to describe economic health, he or she would say it is best to get knowledge by learning the importance of gross domestic products. Once that is tackled, an individual would be able to understand the true works of the economy. Example of gross domestic products is GDP, roles of government bodies that determine national fiscal policies and fiscal policies effect on the economy. This will help understand how the economy works.

Use of GDP

Statistics used to measure the economy would be labeled as GDP. The U.S is measured by GDP, and everything is produced by the people and all companies. GDP looks at the total income that each person in the economy is earning as well as how much is spent on the production of service and goods. It also measures three to four separate components of the economy’s spending. They are net exports, investment, government purchase and consumption. GDP is considered a main part in the economy’s cycle and measures the variables of the total income of all services and goods produced and purchased in the economy. It is directly related to the business cycle movement.

Roles of Government

There are plenty of government agencies who decide national fiscal policies. The government deals with tax and interest rates as well as government spending. This is in an effort to control the economies outrages spending habits. The Federal Reserve regulates the supply of currency which helps control and keeps down price increases. The Reserve act sets goals of fiscal policy to promote effectively goals of maximum employment, long-term interest rates and stable prices. The IRS deals with the taxation of the nation and is also in charge of setting up the sales taxes for goods and services taking place in America.

Effects of fiscal policies/Government spending...