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Memo
To: Kristin No’name
From: Amber
CC: Ryan No’name
Date: [ 12/7/2010 ]
Re: Measuring Economic Health I am writing the two of you in response to the questions you have. This memo should give you all the information that you need. If I do not cover it all, please get back to me at your earliest convenience and I will do my best to answer the rest. Gross Domestic Product (GDP) is the yearly output of goods in a country. In regard to the business cycle, the current years GDP is compared to previous years to determine a trend and to possibly predict future outcomes or to just see how an economy is doing. When the GDP rises, then there is growth in the economy. If the GDP is falling, then there is a slump in the economy. If the GDP falls to the point of creating hardships for businesses then the economy is considered to be in a recession. If the GDP rises close to the maximum point, then the economy is considered to be booming. There are four major government bodies that determine national fiscal policies. They are the department of treasury, government accountability office, office of management and budget, and the office of the president of the United States. The treasury department handles, creates, and applies the fiscal policy. The government accountability office is in charge of audits. The office of management and budget deals with the improvement and study of fiscal policy and the office of the United States president is the decision maker. Fiscal policies effect both an economies production and employment. When taxes are low, consumers are more apt to purchase goods. This increase in consumption stimulates the economy, thus providing more employment opportunities. This is a positive impact, because not only is employment increased, so is production. When taxes are high, the opposite situation occurs in that consumers are less apt to make purchases, creating a negative impact on the economy. Government purchases if done correctly can also be positive. For example, if the government were to buy or even fix roads, creating a route to job opportunities, then it may help with employment, which results in production. I hope that this information is what you were looking for. Please feel free to ask any questions that you may have.