Firm's Profit

Business cycles are fluctuations in economic activity that occur in a market system as measured by increases or decreases in real Gross Domestic Product. Most economists agree that the level of economic activity have an impact on the business cycle. By analyzing key indicators, economists are able to determine the occurrence or duration of each phase of the business cycle and to predict where the economy is headed. VIDEO OBJECTIVES - Examine the four phases of the business cycle - Identify the three leading indicators used to determine the current phase of the business cycle, and predict where the economy is headed

Economists analyze price fluctuations by examining the price level, inflation, and deflation. They use both the consumer price index (CPI) and the producer price index (PPI) to measure the amount of fluctuation, estimating the pace at which the price level increases. These fluctuations can affect the purchasing power of the dollar, the value of real wages, interest rates, saving and investing, and production costs. VIDEO OBJECTIVES - Explain how economists evaluate price changes over time - Describe what causes inflation - Identify the main two price indexes that economists use to measure inflation - Explain how inflation affects the economy

Production decisions are affected by the need of maximize productivity and by the costs of production. When setting production levels, business owners must consider several factors regarding output, as well as the various costs associated with producing goods. VIDEO OBJECTIVES - Explain why producers look at productivity when making supply decisions - Describe how varying the levels of input affects the levels of output - Explain how changes in production costs affect producers' supply decisions

Business cycles are fluctuations in economic activity that occur in a market system as measured by increases or decreases in real Gross Domestic Product. Most economists agree that the level of economic activity have an impact on the business cycle. By analyzing key indicators, economists are able to determine the occurrence or duration of each phase of the business cycle and to predict where the economy is headed. VIDEO OBJECTIVES - Examine the four phases of the business cycle - Identify the three leading indicators used to determine the current phase of the business cycle, and predict where the economy is headed

Fiscal policy is influenced by the schools of supply-side economics and demand-side economics, both of which pursue the goal of economic growth. The chief tools of fiscal policy are marginal tax rates, tax incentives, government spending, public transfer payments, and the progressive income tax. Fiscal planners use these tools whether they believe in supply-side theory or demand-side theory. Several limitations can limit the effectiveness of fiscal policy on the economy. VIDEO OBJECTIVES - Explain how supply-side and demand-side theories differ - Identify the chief tools of fiscal policy - Describe the factors that limit the success of fiscal policy