ECON 102 Lecture Notes - Lecture 18: Potential Output, Baby Boomers, Business Cycle
Document Summary
According to many economists, it took wwii to finally get the u. s. out of the great. By 1939 the u. s. was already raising military production in preparation for war and sending supplies overseas, so the war positively affected the economy even before the u. s. officially entered it in december, 1941 after the attack on pearl. Real gdp: extremely high growth during the early 1940"s (16-18% in the middle of the war), followed by post-war negative gdp growth. This period of negative growth might be called a recession, but it was caused more by coming down off the dramatic mobilization of the wwii period rather than business cycle fluctuations. People were working more than they would have ever considered in normal times. The economy was producing at a level well above its long-run trend. Note that the economy was producing above prof. fazzari"s estimate of potential or full employment output.
