ABSTRACT
The mystery as to what, besides errors in monetary policy, may be responsible for those cyclical movements can in fact be cleared up only by delineating, in addition to the enterprise and household sectors, a separate government and not-for-profit sector. The political system, or polity, has both its formal and informal components. For the society as a whole, the formal component is the government. It is the government which, in the form of various laws, judicial rulings and administrative acts, actually produces the decisions which are the output of the political system. The most important distinction, in the case of the United States, is between the federal government on the one hand and state and local governments on the other—with various nonprofit organizations and even certain profit-oriented private enterprises forming a third tier of service providers. The former will indicate the necessary purchase of goods and services by the government and not-for-profit sector from the enterprise sector.
