Fiscal Policy, Monetary Policy, and a Healthy Gross...

Economic Health/Fiscal Policies and Federal Reserve/Monetary Policies Paper Understanding Gross Domestic product is central for understanding the business cycle and the progression of long-run economic growth (Hubbard O’Brien, 2011, p. 631). The GDP is defined as the value-added of all goods and services produced in a given period of time within the United States (2008). The GDP is widely used as an gauge economic wellness and health of the country. What the GDP represents has a hefty impact on nearly everyone within our economy. As an example, when the economy is healthy, you will usually see wage increases and low unemployment as businesses demand labor to meet the increasing economy. The government has two types of economic†¦show more content†¦Non-economic reasons can include factors such as drought, war, man-made and natural disasters. When the economy expands: unemployment decreases, inflation begins to increase and the real GDP rises. In contrast, when the economy contracts: unemployment increases, inflation decreases and the GDP falls. Role of Government Bodies in Determining National Fiscal Policies Fiscal policy is the use of a government’s taxing, debt, and spending authority for the purpose of influencing economic growth. Congress and the president share responsibility for economic policy with the Federal Reserve (Hubbard O’Brien, 2011, p. 929). The government can influence macroeconomic productivity levels by increasing or decreasing tax levels and public spending (Hubbard O’Brien, 2011). The government uses fiscal policy to make changes in government purchases and taxes, to achieve policy goals. The price level and the levels Gross Domestic Product and total employment in the economy rely on the collective demand and short term aggregate supply. The government can both aggregate demand and collective supply through fiscal policy (Hubbard O’Brien, 2011, p. 900). Fiscal policies can influence the economy’s production and employment. For example, since the government controls the central bank, it may be tempted right before an election to increase the money supply and drive down interest rates to increase production andShow MoreRelatedThe Great Recession Of 20081691 Words   |  7 Pagesalong with the changes in fiscal and monetary policies. Furthermore, many economists believe that the increase of excess monetary and government irresponsibility led to the overall crisis in the mid to late 2000’s. Some economists believe that the oversupply of monetary contributed to the 2008 crisis due to low interest rate targets that were substantially below the monetary requirement. In this paper I will discuss the effects of the changes in monetary and fiscal policies that altered the economyRead MoreForeign Direct Investment Of India1718 Words   |  7 PagesForeign Direct Investment in India Foreign Direct Investment Foreign Direct Investment is the investment of a country domestic assets into foreign structures, equipment and organizations, but does not include investment into stock markets. Foreign direct investment reflects the objective of obtaining a lasting interest by a resident entity in one economy (direct investor) in an entity resident in an economy other than that of the investor (direct investment enterprise). The lasting interest impliesRead MoreThe Great Recession Lasted From December Of 2007 Until1229 Words   |  5 Pageslongest recession since World War II. During this time, gross domestic product (GDP), inflation, unemployment, and interest rates were all greatly affected. 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Economic growth in Japan has been predicted to reach 1.0% in 2017 before slowing down to 0.8% in 2018. At the moment fiscal consolidation (a policy aimed at reducing government deficits and debt accumulation) has stopped, which should aid Japan in dealing with the impact of the appreciating yen. Though there has been a decline in business investment, private consumption is still addingRead MoreInternational Trade Affect The Economic Activity By Resources And Consumer Preferences880 Words   |  4 Pagescountries. The president has influence on the economy with the support of congress. Congress ensures the economy is stable. The Federal Reserve stimulates the economy by regulating the nation’s financial institutions and dictates economic and monetary policies. The president and congress stimulates the economy by creating more job opportunities with tax credits, tax cuts, and funding governments. Tax credits are provided to businesses that would allow the businesses to add more jobs which would benefit