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A successful functioning and development of any country’s economy is largely determined by the ability of the state and municipal authorities to ensure the economic stability, state defense, developing the social sphere and raising living standards. The realization of these functions is impossible without the government financial base, the regulation of financial relations in society, creating a financial mechanism for their implementation in accordance with the objectives of the economic development.
A change of the economic development’s purpose makes it necessary to change the financial relationship in its industries and fields of activity. Moreover, the sources of funding and forms of their use are reviewed. In these circumstances, the state develops the relevant financial policy, which is a set of targeted actions of the state in financial management in order to determine the most effective modern conditions of activities to create a financial base for the implementation of the economic policy.
In addition to all above mentioned, it is necessary to add that the subjects of financial policies are the legislative (representative) and executive power that define and approve the main directions of the financial relation’s development, and develop specific ways of organizing for economic entities, public and state. The objects of fiscal policy are a set of financial relationships and financial resources, which form the scope and units of the financial system of the state.
In order to fully discuss and examine this theme it is necessary to describe the concept of the GDP in this part of the paper.
The gross domestic product (GDP) is a number of products and services at the market value, created for a certain period of time as a result of production activities of economic units that are residents in the country. Residents can be defined as the economic units (enterprises and households).
This is a well-known fact that when there is a rise of the GDP there is an increase in the business cycle of a country. Consequently, when there is a decrease of the GDP then the business cycle of a country turns into a recession.
According to Kimberly Amadeo the GDP is very important for the economy for some reasons:
 Most importantly, it is used to determine if the U.S. economy is growing more quickly or more slowly than the quarter before, or the same quarter the year before.
 It is also used to compare the size of economies throughout the world.
 It is to compare the relative growth rate of economies throughout the world (Amadeo, para. 6).
There are some government bodies that define the national fiscal policies in order to improve and stabilize the economy of the country. Those bodies regulate government spending, interest and tax rates in order to control the national economy. The Federal Reserve is among the government bodies, which deals with the supply of money and is responsible to keep down inflation and to control the economic situation in the country. Another one is the Internal Revenue Service (IRS), which manages the citizens’ taxation. Besides, the IRS is also responsible for the creation of the sales taxes for services and goods that take place in the USA.
The government changes policies can negatively or positively affect the economy’s production and employment.
For instance, the government tries to apply the green energy. Hence, it will provide subsidies in order to support these businesses, which will help them to hire more workers. With increasing demand for the products the government will create projects for these companies.
Taking everything into consideration, it is possible to draw a conclusion that the GDP is defined as the price of domestically produced final goods and services, i.e. goods and services used for the final consumption. The cost of intermediate goods and services purchased and used in manufacturing are not included in the GDP.

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