... On Jan. 21, 2008, stock prices tumbled around the world. Why was this ironic?
BUSINESS CYCLE, FEDERAL RESERVE, TAXATION
... rising. Inflation is a natural occurrence, but high rates of
inflation can cause a decline in business activity.
• Inflation is caused by an increase in the money supply. Money
in circulation, or being spent.
• During a period of recession, consumers are not spending
money, thus business p ...
January 2009 Macro Headlines
... • High risk (“sub-prime”) mortgages became
more common over past decade
– Low down-payments;
– Poor credit histories
Macroeconomic Forces Chapter 2
... 1979. In late 1979 the Fed switched to monetary aggregates
as a monetary policy target with resulting overnight increases in
nominal interest rates. Private borrowing fell over 50% during
the second quarter of 1980.
– In early July the Fed eased credit and interest rates fell resulting
in renewed ex ...
Lesson 2 Activities - Teaching Financial Crises
... remained extremely high for the rest of the decade.
During this recession, the real GDP of the U.S. fell 3.2 percent. Although the recession ended in March
1975, the unemployment rate remained high for several months. In May 1975, the rate reached its peak
for the cycle at 9 percent.
Introduction Key May/June Data
... Northwood University is committed to a policy of nondiscrimination and equal opportunity for all persons
regardless of race, gender, color, religion, creed, national origin or ancestry, age, marital status, disability or
veteran status. The University also is committed to compliance with all applica ...
... Each year there are ups and downs in
unemployment, world trade, inflation,
These are called business
fluctuations or the business cycle.
Turning Points and Leading Indicators
... if a recession has begun, unlike the popular misleading “two down
quarters of GDP” rule of thumb, according to which, if GDP falls
for two straight quarters, we have met the “technical” definition of
a recession. GDP is just a measure of an economy’s output. But if
employment, income, and sales do n ...
... CONSUMER SPENDING IS STRONG
... consecutive quarter of negative growth. Interest rates
THE BUSINESS CYCLE
... Viewing http://www.youtube.com/watch?v=EMHkiKxtlvw
“a backwards rollercoaster”
3 indicators of recession by NBER
definition of recession
economic trends in recession
V-shaped recession v. U-shaped recession
What is the difference between a recession and a depression?
... between the two:
There are repeated periods during which real GDP falls, the most dramatic
instance being the early 1930s. Such periods are called recessions if they are
mild and depressions if they are more severe.
As Mankiw pointed out, perhaps the most famous economic downturn in the
U.S.’s (as w ...
Economic Ups and Downs
... is a period of significant decline in the
economy. These recessions usually las
from 6 month to a year.
During this time the economy produces
much more then consumers can use.
Because of this business profits go down
requiring businesses to cut manufacturing
and layoff and fire workers.
U.S. Economy Presentation
... Too little too late? Not clear because we need to
know what would have happened without the
policy (the condition that we can never know)
A New Keynesian Perspective on the Great Recession
... and supply disturbances
The Great Recession had adverse shocks that lased much longer and were
much more severe
Zero lower bound on short-term interest rate
Need more complete and detailed assessment of monetary policymaking
The euro area seems unlikely to avoid a recession
... economies, which posted growth in the third quarter, are losing steam. Euro-area gross domestic product
(GDP) rose 0.2 % last quarter, Eurostat said, propped up by the German and French economies, which account
for about 48 % of the region’s economic output. Germany expanded 0.5 % and France 0.4 % f ...
Phases of the Business Cycle Detailed Powerpoint
... • Note: “Years” is on horizontal axis and “real GDP”
is on vertical axis.
• General trend of economic growth
• Recession years are shaded blue: note downward
slope on graph indicating that GDP is decreasing.
... • Modern Macro is “new.”
• Before 1930s, the economy was thought to be
primarily self-regulating (thought that markets
would ‘clear’ by themselves).
• Production and Unemployment in the Great
Depression changed that view.
• Production was extremely low. Employment was
• John Maynard ...
... real GDP for two or more
consecutive quarters (6
months or more).
Depression: Prolonged and
Trough: When demand,
production, and employment
reach lowest levels.
here - Cornell University
... Aid to state government
Aid to already-in-the-pipeline projects
Try to promote long run growth where possible
In economics, a recession is a business cycle contraction. It is a general slowdown in economic activity. Macroeconomic indicators such as GDP (gross domestic product), investment spending, capacity utilization, household income, business profits, and inflation fall, while bankruptcies and the unemployment rate rise.Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock or the bursting of an economic bubble. Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply, increasing government spending and decreasing taxation.