Lecture 21

Lecture 21 - American Heritage November 9, 2011 November 9,...

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Unformatted text preview: American Heritage November 9, 2011 November 9, 2011 Midterm #2: November 9 th-11 th in the Testing Center Wednesday, November 9 th (NO FEE) Thursday, November 10 th--$5 late fee Friday, November 11 th--$7 late fee-- must have test in hand by 11:00 am! Must know all of the articles and through amendment 15 Review Room will be closed during the exam. It will open again Monday, November 14 th to review the exam Essay #4 due at the START of labs on Thursday, Nov.17 th or Friday, Nov. 18 th Must turn it in hard copy and electronically via black board Market Weaknesses Imperfect Information Monopoly Public Goods Externalities Economic Instability or Recession Economic Injustice Recession What Is a Recession? Recession Definition: a significant decline in economic activity spread across the country, lasting more than a few months ... National Bureau of Economic Research Business Cycle Dating Committee Great Depression lasted 43 months Previous post-WWII recessions have lasted from 6 to 16 months (average: 10 months) Why Do Recessions Occur? A negative shock hits the economy Example: stock market correction, oil price increase, bank panic, etc. If wages and prices adjust downward quickly, full employment is preserved and output stabilizes But contracts, inertia, and other forces (government policies?) prevent quick adjustment of wages and prices Output falls and resources are unemployed, including labor Recovery takes place as wages and prices adjust Recession Spiral Problems in one part of the economy are likely to affect other parts of the economy. Recessions Recessions are costly Lost employment of resources/income Lost output Recessions may also have some benefits Allow for readjustments which can lead to increased standard of living in the future Like going to the dentist -- painful now, helpful later What Can Government Do? Government Do?...
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Lecture 21 - American Heritage November 9, 2011 November 9,...

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