Perhaps the most widely quoted and influential definition is that of Burns and Mitchell (1946, p.l) who state that:
Business cycles are a type of fluctuation found in the aggregate economic activity of nations that organize their work mainly in business enterprises:
In a market economy, producers often spend large amounts to make sure that consumers—even very young children—know the names and logos of their products. This is because free-market consumers have freedom of choice, and they will often choose brand names they recognize. In this section, you’ll learn more about freedom of choice and the other major characteristics of a market economic system.
The U.S. economy consists of millions of buyers and sellers of goods and services. Think about all the economic activity near where you live. Even in a small town there are dozens of businesses, hundreds of workers, and thousands of items that could be purchased on any given day. You could not possibly keep track of all the decisions that affect the economy of a small town.
Modern complex economies involve the interactions of large numbers of people and organizations. These economic agents fall into one of three categories: business, households, government, and the rest-of-the-world. Economists find it useful to think of these groupings as sectors of the economy. Let's look at each of these sectors in turn:
There has long been something appealing for economists about the idea that the economy may behave with the same mathematical predictability of scientific laws such as Newton’s laws of motion. Newton’s laws reduce the whole complex, teeming, physical universe to three simple, reliable mathematical relationships. Is it possible to find similar relationships in the complex, changing world of markets?
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