Basic Economic Concepts: Rapid Fire

What this video covers

• The four stages of the business cycle in order (trough, expansion, peak, contraction), and why gross domestic product (GDP) is still positive at the peak
• The precise definitions of recession (2 consecutive quarters of declining GDP) and depression (6 consecutive quarters), plus the formula for GDP (C + I + G + (X minus M))
• The split between monetary policy (Federal Reserve, money supply, and interest rates) and fiscal policy (Congress and the President, spending and taxation)
• The three Fed tools, with open market operations (OMOs) as most-used, the discount rate as the only directly controlled rate, and how expansionary versus contractionary moves work
• The difference between the yield curve (plots maturities, inverted means recession warning) and credit spreads (compare credit qualities, widen in fear)
• Why disinflation is slowing price increases, deflation is falling prices below zero, and stagflation is the nightmare combo of high unemployment, high inflation, and stagnant growth
• Leading versus coinciding versus lagging indicators, with initial unemployment claims leading but the unemployment rate lagging