Measuring Economic Health

Measuring Economic Health Memo
Rockefeller I. Hayag
Economics 212
September 8, 2010
Caryn Callahan

Measuring Economic Health Memo
The economic status of any country can be measured by the gross domestic product (GDP).   “The gross domestic product equates to the total market value of all final goods within a nations’ borders during a given period of time”.   (Investopedia, 2010)  
Measuring the Business Cycle with the Gross Domestic Product (GDP) as a baseline reference point allows analysts a way to gauge where the economy is in regard to economic expansion, recession, and growth.    
The government has several agencies that institute the fiscal policies for the purpose of controlling and maintaining the economic condition of the country.   The areas of the economy in which they govern and reinforce policy involve establishment of taxes and interest rates as well as the amount of government spending.   “Answering to the Congress the Federal Reserve regulates the supply of money which helps control and keeps down inflation. The Federal Reserve Act sets forth the goals of monetary policy, specifically to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates. Financial stability is an important prerequisite for achieving those goals. The Internal Revenue Service or IRS deals with the taxation of the citizens. The IRS is also in charge of setting up the sales taxes for goods and services taking place in America”.   (Escobedo, 2009)
Government agencies that control and impose policies affect the rate of production by optimizing the allocation and spending of funds.   When corporations earn more money, it gives them the chance to hire more employees to work in meeting the consumer demands.   The government can change its policies regarding budgetary policy that would establish current...