Economic Factors: Rapid Fire
Chapters in this video
- 0:00 Fiscal policy vs monetary policy: who pulls which lever
- 1:37 Fed funds rate trap and the interest rate staircase
- 2:51 Open market operations chain reaction
- 3:54 GDP vs GNP: Riley in Paris
- 4:47 Two quarters and the business cycle roller coaster
- 5:50 Cyclical, defensive, and growth stock buckets
- 6:25 Leading, coincident, lagging indicator memory aid
- 7:26 Employment cluster trap
- 7:55 Balance sheet snapshot vs income statement period
- 8:19 Rapid-fire exam recap
What this video covers
- How fiscal policy (taxation and spending by Congress and the President) differs from monetary policy (interest rates and money supply controlled by the Federal Reserve)
- Why the Federal Reserve does NOT directly set the federal funds rate, but does directly set the discount rate, and how those fit into the fed funds-to-discount-to-prime rate staircase
- How the Fed's open market operations chain from bond purchases through interest rates, bond prices, stock prices, and the value of the U.S. dollar
- The inverse relationship between bond prices and interest rates, and why this is never violated
- The distinction between gross domestic product (GDP), which measures production within U.S. borders, and gross national product (GNP), which measures production by U.S. citizens anywhere in the world
- How to classify stocks as cyclical, defensive (counter-cyclical), or growth, with specific examples of each
- How leading, coincident, and lagging indicators predict, describe, or confirm economic conditions, including the employment cluster trap: initial claims = leading, non-farm payrolls = coincident, unemployment rate = lagging
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete SIE course in the app is free too, including adaptive practice questions and spaced-repetition flashcards.