1) GNP is equal to the sum of the values of all consumer and investment goods, government purchases, net exports to other countries. The GNP is used for many purposes, but the most important is that it determines the performance of the entire economy. A sharp decrease in the cost of goods and services produced by the economy, that is, a sharp decrease in GDP entails poverty, bankruptcy, failure of banks, the chaos and political turmoil. Gross national product (or GNP) is the most extensive measure of total national output of goods and services. This is the sum of the market values of consumption, gross investment, government purchases of goods and services and net exports.
2) Fiscal policy is the aggregate of financial measures of state regulation of the governmental incomes and expenses. There are following objectives of fiscal policy:
Smoothing the fluctuations of the economic cycle
Sustainable economic growth
Achievement of high level of employment and moderate inflation.
The most important purpose of fiscal policy is the attraction of cash resources and the formation of centralized state funds, which allow for economic policies.
3) The US recorded a Government Debt to GDP of 104.17% of the nation's GDP in the last year. The middle value of Government Debt to GDP in the US from 1940 until today is 61.94%, with the highest result of 121.70% in 1946 and a record low of 31.70% in 1974. This rate is accounted by the U.S. Bureau of Public Debt. ("United States Government Debt to GDP | 1940-2016 | Data | Chart | Calendar", 2016)
These are the potential results of unchecked government obligation:
decreased future national wage and expectations for everyday comforts;
decreases in spendingon government programs;
higher minimal duty rates;
higher expansion" that expands the measure of future spending shortages and declines the obtaining force of residents reserve funds and wage;
confined capacity of policymakers to utilize financial arrangement to react to startling difficulties, for example, monetary downturns or global emergencies;
misfortunes for common assets, annuity reserves, insurance agencies, banks, and different holders of government obligation;
expanded likelihood of a financial emergency in which speculators would lose trust in the administration's capacity to deal with its financial plan, and the legislature would be compelled to pay a great deal more to obtain cash.
4) The fiscal imbalance is the excess of budget expenditures over revenues. It is a measure of the negative phenomena in the economy, causing inflation of the monetary unit. The causes of the shortage is the decline of production, reducing the effectiveness of the functioning of individual industries, its failure to carry out structural changes in the economy or its technical re-equipment; large military spending; other objective and subjective factors influencing economic and social policies of the state.
References
United States Government Debt to GDP | 1940-2016 | Data | Chart | Calendar. (2016). Tradingeconomics.com. Retrieved 30 July 2016, from http://www.tradingeconomics.com/united-states/government-debt-to-gdp
