What caused the 1940s inflation? The contrasts in initial economic conditions leading up to the inflationary crises of the 1940s and 1970s are still noticeable today. A substantial outward shift in demand occurred through the demographic vector in both the 1940s and the 1970s, which raised real GDP growth well above the long-term trend potential, […]
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Inflation is a concern because it reduces the value of money saved today. Inflation reduces a person’s purchasing power and can even make it difficult to retire. For example, if an investor gained 5% on stock and bond investments, but the inflation rate was 3%, the investor only got 2% in real terms. We’ll look
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We must first grasp the business cycle in order to comprehend the state of the economy and how recessions affect investors. The business cycle describes the swings in economic activity that a country’s economy goes through throughout time. The economy is strong and growing at the top of the business cycle, and company stock values
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Unfortunately, a worldwide economic recession in 2021 appears to be a foregone conclusion. The coronavirus has already wreaked havoc on businesses and economies around the world, and experts predict that the devastation will only get worse. Fortunately, there are methods to prepare for a downturn in the economy: live within your means. What are the
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Economics is no exception. Many abbreviations are used by economists. GDP, or gross domestic product, is one of the most commonly used terms. It is frequently mentioned in newspapers, on television news, and in government, central bank, and company publications. What are the three different types of GDP? The monetary worth of all finished goods
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Inflation, or the gradual increase in the price of goods and services over time, has a variety of positive and negative consequences. Inflation reduces purchasing power, or the amount of something that can be bought with money. Because inflation reduces the purchasing power of currency, customers are encouraged to spend and store up on products
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A recession is a period of economic contraction during which businesses experience lower demand and lose money. Companies begin laying off people in order to decrease costs and halt losses, resulting in rising unemployment rates. Re-employing individuals in new positions is a time-consuming and flexible process that faces certain specific problems due to the nature
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Real GDP measures the entire value of goods and services by computing quantities but using inflation-adjusted constant prices. This is in contrast to nominal GDP, which does not take inflation into account. When adjusted for constant prices, it becomes a measure of “real” economic production that may be compared across time and countries. What is
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Recessions and depressions share comparable indicators and causes, but the severity, duration, and overall impact are the most significant distinctions. A depression lasts years, not months, and is marked by increased unemployment and a deeper drop in GDP. While a recession normally affects only one country, a depression is usually severe enough to affect global
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Stocks have a good chance of keeping up with inflation, but not all equities are made equal when it comes to doing so. Inflationary periods, for example, tend to batter high-dividend-paying stocks like fixed-rate bonds. Is inflation beneficial to bank stocks? Inflation in the United States continues to rise, with the price index for American
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