Economic Health/Fiscal Policies and the Federal Reserve/Monetary Policies Document Understanding gross domestic product is critical to understanding the business cycle and the progression of long-term economic growth term ( Hubbard and O'Brien, 2011, p. GDP is defined as the value added of all goods and services produced in a given period of time in the United States (2008). GDP is widely used as an indicator of economic well-being and the health of the country.What GDP represents has a strong impact on almost everyone in our economy. For example, when the economy is healthy, you usually see wage increases and low unemployment as businesses require labor to meet the growth of the economy. The government has two types of economic policies used to control and maintain a healthy economy, fiscal policy and monetary policy. When economic growth is healthy it will have positive effects on both individuals and businesses. Using GDP to Measure the Business Cycle Fluctuations in economic growth are known as the business cycle. GDP is a useful indication and measure of fluctuations in economic contractions. The measurement of GDP can be approached from three angles: industrial value added, final expenditures and factor incomes (2008). The first angle measures the added value created by the industry; less production and inputs purchased from other producers. The second corner measures spending by consumers, by businesses on investment goods, by the government on services and goods, and by foreigners on exports; minus domestic residents' expenditure on imports. The last corner measures the income generated by production, the operating surplus generated by businesses and the income from employment (2008). GDP does not remain...... middle of paper......om/doc/1G2-3401801494.html"Gross Domestic Product." International encyclopedia of the social sciences. 2008. Retrieved January 9, 2012, from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3045300969.html"Money." Dictionary of American History. 2003. Retrieved January 9, 2012, from Encyclopedia.com: http://www.encyclopedia.com/doc/1G2-3401802723.htmlArestis, P., & Sawyer, M. (2010). The return of fiscal policy. Journal of Post Keynesian Economics, 32(3), 327-346. .Board of Governors of the Federal Reserve System. (n.d.). Retrieved from http://www.federalreserve.gov/monetarypolicy/default.htmHubbard, R. G., & O'Brien, A. P. (2010). Economics (3rd ed.). Boston, MA: Pearson Hall. Poole W. The monetary policy model. Business Economics [online serial]. October 2006;41(4):7-10. Available from: EconLit with full text, Ipswich, MA. Accessed in January 10, 2012.