a. The GDP is very important for measuring the business cycle. In actuality, it is possible to identify different stages of the business cycle on the basis of GDP. To put it more precisely, the growth of GDP indicates to the economic development and therefore the growth of GDP implies that the business cycle has entered the stage of growth. As soon as the growth of GDP slows down the business cycle reaches its peak, while the decline of the growth of GDP rate clearly indicates to the economic recession.
b. The government plays the determinant role in fiscal policies of the state. In fact, the government bodies define fiscal policies and can increase or decrease the fiscal pressure, depending on the current economic situation in the country. At the same time, it is worth mentioning the fact that the role of local authorities steadily increases as local budgets get a larger share of state revenues compared to the national budget.
c. Traditionally, fiscal policies perform regulatory function in the national economy. The government uses fiscal policies to regulate social and economic development of the country because it is one of the most efficient tools which the government can use to influence economy and business. In this respect, it is important to distinguish two major effects of the governmental fiscal policies. On the one hand, fiscal policies can have a stimulant effect on the national economy. As a rule, the decrease of the fiscal pressure stimulates the economic development of the country through rapidly growing business activities. On the other hand, when the national economy is overheating, the fiscal policies can be used to cool it down since the increase of fiscal policies slows down business activities that prevents overproduction which may lead to unemployment and decrease of consumption.

Works Cited:
Dow, S. and Hillard, J. (eds.). Keynes, Knowledge and Uncertainty. New York: Routledge,1995.
Holcombe, R. Public Sector Economics: The Role of Government in the American Economy. New York: Allyson and Beacon, 2006.
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