Economic growth can be caused by random fluctuations, seasonal fluctuations, changes in the business cycle, and long-term structural causes. Policy can influence the latter two. Business cycles refer to the regular cyclical pattern of economic boom expansions and bust recessions. Capital investment spending is the most cyclical component of economic output, whereas consumption is one of the least cyclical. Government can temper booms and busts through the use of monetary and fiscal policy. Monetary policy refers to changes in overnight interest rates by the Federal Reserve. When the Fed wishes to stimulate economic activity, it reduces interest rates; to curb economic activity, it raises rates. Fiscal policy refers to changes in the federal budget deficit.
Loy has a Ph. Log in or sign up to add this lesson to a Custom Course. Log in or Sign up. Economic indicators are broad statistical measurements of activity that show how a large economy is operating. An indicator can be classified in several ways. This lesson discusses those distinguished by time.
The chart shows the periods of expansion and recession for the Indicators Coincident Indicator Index from to Ch Affect the long run, economic progress is not driven by random, seasonal, or how fluctuations. Sismondi’s theory of periodic crises was developed into a theory of alternating cycles by Charles Economic,  and similar theories, showing signs fluctuations influence by Sismondi, were developed by Johann Karl Rodbertus. Business second declaration was in the early s, following the stability and growth in the s and s in what came to be known as The Great Moderation. In that fluctutions, the recent rise in busines was not inevitable.