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Recession, Depression, Inflation, Stagnation? : Economics Concepts Which Matter

Recession, Depression, Inflation, Stagnation? : Economics Concepts Which Matter
"""The general public is frequently bombarded with a plethora of economic terms, which, rather than assisting the untrained in better understanding, merely confuses them. How many times have we heard terms like recession, depression, inflation, stagnation, and so on but have only a hazy understanding of what they mean? As a former licensed representative and principal for a financial services firm, I have learned and developed an understanding and appreciation for what these terms mean and the potential consequences. I frequently try to make others feel more at ease by joking that the difference between a recession and a depression is that the former happens to you, but the latter happens to me! With this in mind, this article will attempt to consider, examine, review, and discuss these four concepts/principles and what they mean and represent in a brief manner.

1. Recession: A recession is generally defined as a period of temporary economic/financial decline in which trade, industrial activity, and other economic indicators show a decline for at least two consecutive quarters. It is typically evaluated in terms of the Gross Domestic Product, or GDP, which measures a country's overall economic performance. The Federal Reserve Bank frequently employs a variety of tools and methods to stimulate activity, such as lowering interest rates.

2. Depression: When a recession becomes even more severe and lasts for an extended period of time, it is often referred to as a depression. We may see either a specific component of the economy that is depressed, such as housing or industry, or an overall one. Almost everyone is familiar with the period known as the Great Depression, which began in 1929 and lasted several years.

3. Inflation: Inflation is the rate at which a specific (or several) currency falls, resulting in an overall increase in most product and service prices. The Federal Reserve Bank's usual pattern is to raise the costs of borrowing money, also known as interest rates. When these rise significantly, many people discover that their wages do not keep up with the inflation rate!

4. Stagnation: In economic/financial terms, stagnation refers to a significant period of little or no activity, growth, and/or meaningful development! When this happens for an extended period of time, it usually results in a loss of employment opportunities and, in some cases, even more unemployment. Governments have historically used a variety of economic stimuli to boost overall economic activity and, hopefully, return us to a stronger, better financial position.

When it comes to money, the more one knows, the better off one is in being prepared for eventualities. Learn everything you can for your own good."""
 

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"Recession, Depression, Inflation, Stagnation? : Economics Concepts Which Matter" was written by Mark under the Finance category. It has been read 107 times and generated 0 comments. The article was created on and updated on 13 January 2023.
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