ECON1132 Lecture Notes - Lecture 13: Business Cycle, National Bureau Of Economic Research, Reserve Requirement
25 Mar 2015
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Econ1132: principles of macroeconomics- lecture 13: business cycles and forecasting. Reserve requirement: a legal requirement to hold a certain ratio of reserves to demand deposits. Capital requirements: required by law to have a certain ratio of net worth to assets. Q* (potential output) rises over time as labor and capital increase and as we achieve technological progress. Q* in the u. s. has grown an average annual rate of just about 3. 3% since ww2; q* grows at a relatively steady rate (in keynesian view) Actual output grows rapidly for periods of time and then declines. Recession: short and modest periods of decline. Depression: a downturn that is deep and prolonged. Definition: a movement in real gdp from peak to peak or from trough to trough. The national bureau of economic research (nber) which for years is in charge of the identification of business cycles. In general, we have a recession if real gdp falls for two quarters in a row.
