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Date Submitted: 10/04/2010 10:39 AM
Measuring Economic Health
Alexander T. Rivera
University Of Phoenix
Principles of Economics
ECO 212
MR Bob Watson
July 07, 2010
Measuring Economic Health
The U.S. economy has been in turmoil for quite some time now and the American public is wondering why. The public would be better served if each and every one of us of us is aware of the $13.2 trillion national debt which amount to $42,502 debt per person or $119,062 debt per tax payer in the country, the $14.3 trillion trade deficit, the $16.4 trillion total personal debt (USDebt.org). The economic impact of the numbers above is monumental. Some of the factors that led to these figures can be attributed to unsound government programs and policies, the real estate bubble, double digit unemployment rate, increasing amount of personal debt just to name a few. Perhaps the underlying reason is obvious, we spend more than what we make. This paper is a brief overview of the effects of Gross Domestic Product (GDP) on the business cycle, the roles of government entities such as the Federal Reserve (Fed) national fiscal policies, and how changes in government spending and taxes impacts production and employment.
The best way to understand the U.S. economy is by looking at the Gross Domestic Product (GDP), which is the statistic used to measure the economy. Simply put, the U.S economy as measured by GDP is everything produced by all the people and all the companies in the U.S. It was $14.35 trillion in the first quarter of 2010 (CB0). The Bureau of Economic Analysis (BEA) usually reports real GDP (adjusted for inflation). To accurately compare it from year-to-year, it is measured quarterly and revised as better data becomes available throughout the quarter. BEA then compares each quarter to the previous quarter making three distinctions to calculate real GDP: (1) imports and income from U.S. companies and people from outside the country are not included, exchange rates and trade policies don’t muddy...