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Economic Health Memo

In: Other Topics

Submitted By ambieshell
Words 612
Pages 3
MEMORANDUM
TO: Public
FROM: Amber
DATE: September 13, 2010
SUBJECT: Determination of Economic Health

Because of the importance of the United State’s economic health, it is very important to understand and make oneself knowledgeable of the gross domestic product, the determination of fiscal policies, and the effects of fiscal policies on employment and production.
The gross domestic product, also known as GDP, is a monetary measure of the economy’s production. The entire health of a local, state, and national economy lies in the numbers that the GDP provides us. If there is a higher production from the nation’s businesses then there will be an increase in the GDP. However, if the production numbers fall, the GDP will decrease. If the GDP decreases for two uninterrupted quarters then the economy is said to be in a recession. The fluctuations spoken of are deemed the “business cycle.” The business cycle consists of four phases: expansion, peak, contraction, and trough.
Expansion: Expansion is an acceleration of the pace of economic activity.
Peak: Peak is the point in which the business cycle takes an upward turn.
Contraction: Contraction is the opposite of expansion in where the pace of economic activity has slowed down. If a contraction is severe, it is a recession.
Trough: Trough is the lower turning point in the business cycle where a contraction turns into an expansion. A deep trough is also known as a depression.
The fiscal policy is used to control spending, which will then influence the level and quality of the gross domestic product. The fiscal policy is used to control demand in an economy but can also affect the supply side by providing incentives to work and investment. Fiscal policy is calculated by taxation and government spending. The governing bodies can place in service a number of taxation actions to control aggregate demand, or…...

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