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Banking and Monetary Policy_Butkiewicz_Date__042210

Banking and Monetary Policy_Butkiewicz_Date__042210 -...

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Unformatted text preview: Chapter 12 continued 14: potential output—max can be produced under normal circumstances 15: Y=actual, Y*= potential- If actually > potential then positive % (boom) and vice versa for recession 18: natural rate at fixed value 19: Arthur Okun head of economic advisors for President Kennedy and Johnson- Know law: 2 to 1 relationship 21: actual data for economy fit Okuns law pretty well- Labor hording: training new workers is costly if workers know job, company more reluctant to let them go so find busy work for them to do but not a lot gets done. The workers are kept around for recovery time—there is productivity in recession because of this busy work- Profits & productivity= cyclically sensitive 23: NBER & book def of recession- Output should fall for two consecutive quarters (GDP fall for 6 months)—usually when declare a recession according to the public 26: C= what we buy; I= purchase of firms and construction of new housing (change in business inventory—goods in process but not finished goods); G= military, people in Washington, social...
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