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Measruing Economic Health

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Measuring Economic Health All economies share similar economic goals, which consist of three key essentials, such as growth, employment, and price stability. Some economist’s measure the performance of an economy is by looking at a widely used measure of total output called gross domestic product. As the economy runs and functions business cycles are made and these business cycles are measured in the gross domestic product figures. Plainly stated, gross domestic product, is a figure that signifies the total value of products which have been produced in a country on a given year. The percentage increase or decrease in the gross domestic product figure is a way of measuring and gauging the level of business cycle. By itself, GDP doesn’t necessarily tell us much about the state of the economy; however, the change in GPD does. If the GPD goes up, therefore the economy is growing, but if the does the opposite, such as the GPD declines, the economy is contracting. Furthermore, once the growth of the gross domestic product figure shows an increase from the last period, one can say that a majority of businesses in the country have expanded or have increased their operations. This is known as prosperity and to be an upward trend for the business activities in the economy. However, when the opposite happens, when there is a decline in the gross domestic product figure, then, it is considered to be a business recession, therefore, business activities have decreased. A depression can occur after a recession; however, this step is often skipped and moves straight towards a recovery. In the United States, the government influences economic activity through two approaches: monetary policy and fiscal policy. Through fiscal policy, it uses its power to tax and to spend (K. Collins,2007). Government agencies are in-charge of coming up with the national fiscal policies

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