KnowThisWellHow markets, money, and trade actually work at a national and global scale.
Inflation doesn't mean prices went up once — it means money itself buys a little less over time, which compounds the same way interest does, just working against you instead of for you.
GDP adds up everything a country's economy produces in a given period — but it was never designed to measure well-being, only economic output.
The Federal Reserve doesn't set your mortgage or credit card rate directly — it sets a target for the rate banks charge each other overnight, and that ripples outward through the broader cost of borrowing.
Supply and demand is best at predicting the direction prices and quantities move after a change, like a shortage pushing prices up, not exact numbers. It also predicts what happens when prices are held down by rule: persistent shortages.
'Two quarters of shrinking GDP' is a rule of thumb, not the official U.S. definition. A private committee of economists at the NBER decides, looking at jobs and income across the economy, and it usually announces a recession months after it began.
A tariff is a tax the importing company pays at the border. Studies of the 2018 U.S. tariffs found nearly all of it showed up in U.S. import prices, and domestic competitors raised prices too.
Minimum wage debates turn on one question: when pay is forced up, who absorbs the cost? Jobs, hours, prices or profits. The evidence depends on how big the raise is.
The U.S. unemployment rate isn't a count of benefit claims. It comes from a monthly survey of about 60,000 households, and who counts is narrower than you think.
Economic indicators are measurements with timing: some lead the economy, some move with it, some lag. Here's what each signals, and why first prints get revised.
News headlines use both terms constantly, often interchangeably — but they describe two entirely different levers, controlled by two entirely different institutions, moving at two entirely different speeds.
The Federal Reserve is the U.S. central bank. It steers short-term interest rates to pursue maximum employment and stable prices, supervises banks, and runs payment systems. It doesn't set mortgage rates directly or print paper money.