Since the periodic rises and falls in the economy cause different kinds of disruptions to businesses, the government tries to minimize such impacts.
Taxes are necessary, because with their help the government influences on many economic and social processes. Businesses tend to monitor changes in economic growth, which may signal a change in the demand for their products or services. There are many negative effects on businesses when GDP growth declines such as high unemployment rate, increased business bankruptcy, and overall drop in living standards Amadeo, Its main tasks are the following: The government uses fiscal policy to keep the economy stable.
In the short run, it softens the business cycle. The economy without such calculations would be based on an intuition. Accrued through the taxation money, the government spends on the building of highways, large business sites, public facilities hospitals, schools, kindergartens, swimming pools, and librarieson the maintenance of science and environmental protection.
In the long run, tax cuts could lead to economic growth.
Thus, for example, comparing the levels of GDP for the definite period of time, economists can construct a curve describing the functioning of the economy in the long run, as well as to determine how its rise or decline will affect the rate of national growth.
In times of recession, it is needed to increase government spending, lower taxes, or do both, that is conduct the stimulating fiscal policy. The role of budgeting in the state economy is significant.
Significant part of the money goes to development of general secondary, special and higher education, including the salaries of teachers and scholarships for students.
The restraining fiscal policy is used in order to decrease inflation. As well, the government provides a home, paying pensions and disability benefits. Retrieved May 25,from http: Part of the funds goes to health and development of medicine: In the short run, the restraining fiscal policy allows to reduce an aggregate demand and thereby helps to lower inflation.
Thus, national income accounts provide the tables of economic health of society and allow reasonably determine the policies that would help to improve it. In the long run, it could lead to declining production and rising unemployment Pettinger, The government helps the sick and disabled members of society, maintain a state apparatus, army and law enforcement authorities.
Economic growth is defined as the percentage of change in the GDP from one period to another. When the GDP growth slows or declines, then the business cycle goes into a recession and depression. The internal income calculation provides information, which is the basis for the formation and implementation of public policies aimed at improving the functioning of the economy.
Retrieved 25 May,from http: It reduces government spending, increases taxes or a combination of other measures.
Fiscal policy consists of the decisions taken by the government authorities to change the government spending and taxation. Depending on the purpose, it is used either a stimulating or restraining fiscal policy. Various indicators that form the internal calculation system allow to measure the volume of production at any given time and to disclose factors that directly determine the functioning of the economy.
When there is a rise in the GDP, then there is an expansion in the business cycle of the country.
What Exactly IS the U. The most important indicator of economic conditions is the gross domestic product GDP.
The GDP is defined as the total market value of products and services produced in the United State in a given year Amadeo, Secondly, the budget is a way of accumulation of money to deal with large, global economic projects.StudyMode - Premium and Free Essays, Term Papers & Book Notes.
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