Money does not necessarily need to have any intrinsic value to serve as a medium of exchange. It is someone s willingness to accept it in payment that gives money its value in the exchange process. Profit - Profit is the income left over for the owners of a business after all the costs of production have been paid. Profit is an incentive for entrepreneurs and a reward for taking a risk to start a business. Businesses who make a profit have successfully satisfied the wants of consumers.
Government pays for the goods and services it provides through taxing and borrowing.
Pollution is an example of a spillover cost. Painting one s house is an example of a spillover benefit. Inflation - Inflation is an increase in the overall price level of goods and services, with a corresponding decrease in the purchasing power of money. The primary cause of inflation is an increase in the supply of money relative to the availability of goods and services. Fiscal Policy - Fiscal policy refers to the spending and taxing practices that the Federal government uses to achieve certain economic goals, especially economic growth and full employment.