Figure 25-2 on page 647 discusses business cycles. While peaks and troughs of economic activity are a

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Figure 25-2 on page 647 discusses business cycles. While peaks and troughs of economic activity are a normal part of the business cycle, recessions are not. They represent a failure of economic policy. Go towww.econlib.org/library/Enc1/Recessions.html   andreview the material reported on recessions.

Figure 25-2

Output, Y Money Supply, M + Rate of Money Supply Growth, Peak AM /M + Peak Peak 2 Trough (a) Aggregate output

a. What is the formal definition of a recession?

b. What are the problems with the definition?

c. What are the three D s used by the National Bureau of Economic Research (NBER) to define a recession?

d. Review chart 1. What trend is apparent about the length of recessions

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The Economics Of Money Banking And Financial Markets

ISBN: 9780321584717

4th Canadian Edition

Authors: Frederic S. Mishkin, Apostolos Serletis

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