oh. ii THE CONDITIONS OF EQUILIBRIUM 159

natural-rate may sometimes fluctuate in an extremedegree.

(v.) The Behaviour of Entrepreneurs

We have spoken so far as if entrepreneurs wereinfluenced in their prospective arrangements entirelyby reference to whether they are making a profit orloss on their current output as they market it. Inso far, however, as production takes time—and inBook VI. we shall be emphasising the fact that inmany cases it does take an appreciable time—and inso far as entrepreneurs are able at the beginning of aproduction period to forecast the relationship betweensaving and investment in its effect on the demandfor their product at the end of this production-period,it is obviously the anticipated profit or loss on newbusiness, rather than the actual profit or loss onbusiness just concluded, which influences them indeciding the scale on which to produce and the offerswhich it is worth while to make to the factors ofproduction. Strictly, therefore, we should say thatit is the anticipated profit or loss which is the main-spring of change, and that it is by causing anticipa-tions of the appropriate kind that the banking systemis able to influence the price-level. Indeed it is wellknown that one reason for the rapid efficacy of changesin bank-rate in modifying the actions of entrepreneursis the anticipations to which they give rise. Thusentrepreneurs will sometimes begin to act before theprice-changes which are the justification of their actionhave actually occurred. Since—to take an anticipatedfall of price as our example—a reduction of costs ora reduction of output may, in the case of a singleindustry, actually prevent the incurring of losses orthe feared fall of prices, each may hope by this meansto avoid loss. Nevertheless—short of a completecessation of output by the whole body of entrepreneurs