Measuring Economic Health Memo

To: Jocelyn Burton
From: Derrick Cohen
Date: [ 5/19/2010 ]
Re: Measuring Economic Health
Economic health is best understood by learning the importance of gross domestic product also known as GDP, fiscal policies’ effect on the economy, and the roles of government bodies that determine national fiscal policies. All of which are necessary to understanding the true works of the economy.
GDP to Describe Business Cycle
According to Mankiw,The Gross Domestic Production in connected to the business cycle in a way that they travel along the same path and what happens with the GDP has a direct impact on the outcome of the cycle. When there is a rise in the GDP there is an expansion in the business cycle which gives them a period of growth. When there is a fall in the GDP it can lead to the business cycle experiencing a period of recession. The fiscal policy refers to the government's choice regarding the overall level of government purchases or taxes.   The fiscal policies can have a direct influence on aggregate demand. Because of this our economy is directly affected every time our government makes changes to our fiscal policies, government spending, and our taxes.
Gov’t Bodies that Determine Fiscal Policies
  The government, being a vast entity in itself, is made up of several different bodies and each plays a different role in determining national fiscal policies. The Department of Treasury is one of these bodies.   They construct and manage and implement the fiscal policies.   The Office of Management and Budget develops and analysis the fiscal policies.   The Office of the President of the United States is responsible for making the decisions on the fiscal policies. Also the Government Accountability Office must audit the fiscal policies. The fiscal policies that are implemented in the United States have a tremendous impact on the behavior and decision making of Americans.   In the short run, these policy instruments can change the aggregate...