Measuring Economic Health

Measuring Economic Health and Fiscal Policy
Francisco Keyrose
ECO 212
August 16, 2010

Measuring Economic Health and Fiscal Policy
      The gross domestic product (GDP) is the total market value of the country‚Äôs goods and services produced as a nation on a yearly basis. The GDP is used to track the up-and-down movement of total production and other measure of economic activity this is called the business cycle.   In the business cycle that we are currently in is a recession because the GDP has decreased over the last six months.   We are expecting the cycle trough meaning the low point in the GDP to indicate that the cycle is rebounding to an expansion cycle indicating that the GDP is increasing.   Hopefully not peaking in the cycle too quickly meaning the GDP has reached the highest level.
      The Internal Revenue Service (IRS) is a well known government body by all American tax payers. Starting in 2009 the IRS started to crack down on persons and corporations for back taxes because of short coming in the federal budget   (CNN, 2010) . The IRS makes sure everyone taxpayer pays his or her share according the tax laws in place.   The IRS also drafts and implements new tax laws sometime in favor of small businesses and individuals in forms of tax incentives or credits to stimulate new investment and spending.
      The fiscal policy that is better known to have an effect on the economy is the fiscal policy put in by the U.S. Federal Reserve action of announcing prime rate   (The Federal Reserve, 2010) .   The raise or fall in interest rate controls the spending in the economy by causing the prices of goods to raise or slow down the effects on the GNP.   The government also has injected money into the economy directly in form of government stimulus checks to persons.   The government expected the checks would stimulate the economy by spending the checks.   The opposite happened and people held on to save and pay off debt instead.