Measuring Economic Health Memo

There are many importances when it comes to measuring economic health. Gross Domestic Product (GDP) is a primary display used to measure the health of a country’s economy. Fiscal policies are determined by government bodies that spend policies designed to empower the macroeconomic environment. Even though fiscal policies were created for the healthiness of the country, inflation in the economy can cause unhealthy changes to the fiscal policies.

The use of GDP to measure the business cycle

Gross Domestic Product (GDP) is “the market value of all final goods and services produced in a country during a period of time, typically one year” (Hubbard & O’Brien, 2010). Business cycles are “the recurring and fluctuating levels of economic activity that an economy experiences over a long period of time” (The Currency Group, 2007). In order for GDP to measure business cycles, information has to be collected after a certain time frame is completed, in which, the business cycles are next translated between the changing periods of economic recession or economic expansion.

Explain the relationship between real GDP and the business cycle in greater detail. What happens to GDP in a recession? What about in an economic expansion? How does GDP change in the various phases of the business cycle?

The roles of government bodies that determine national fiscal policies

The President of the United States and Congress sets the national fiscal policies, and they also help with the steps it takes to determine the policies. The U.S. Government Accountability Office “analyzes the Nation’s fiscal and monetary policies with a view toward possible changes” (GAO, 1982). Next is the Department of Treasury. The Department of Treasury has an office called the Office of Fiscal Operations and Policy, which is “led by the Deputy Assistant Secretary” (DOTT, 2008), who implements the fiscal policies. The Office of Management and Budget is another office who helps the President determine fiscal...