What defines an economy?
Existing businesses provide services and supplies to meet consumer and industrial demand. A family needs new shoes; a factory needs a new lathe, an institution requires an updated computer program. The degree to which these transactions take place is a reflection of the perceived state of the economy. If consumers are confident about their future, they buy shoes, perhaps more than one or two pairs. If the business believes a good market for its products is assured, it invests in more tooling and capital equipment to meet sales projections. If an institution anticipates growth it will improve operations to meet the needs of its constituency. In each case there is a forecast of future demand and individuals move to deal with the needs that might arise in the future. The mechanism at work is an endogenous, base line demand. Under static conditions the demand may level off and, excluding inflationary factors, maintain a somewhat balanced economy. At work in the economy are five factors, la
