Economics you can use · Module 1 of 2
What moves the numbers
What interest rate changes do to your payments, the key economic numbers, and what a recession means.
Key terms in What moves the numbers
- Monetary policy
Monetary policy is the set of actions a central bank takes to influence overall demand in the economy, mainly by adjusting interest rates and credit conditions. In the United States the Federal Open Market Committee directs it. The Federal Reserve Act sets goals of maximum employment, stable prices and moderate long-term interest rates.
- Federal funds rate
The federal funds rate is the interest rate at which banks and other depository institutions lend reserve balances to one another overnight. The Federal Open Market Committee sets a target range for it as its main policy tool. Changes tend to influence other borrowing costs across the economy, including rates on credit cards and loans.
Source: Federal Reserve Board, Federal Reserve Board - Open Market Operations
- Gross domestic product (GDP)
Gross domestic product, or GDP, is the total market value of the final goods and services produced within a country during a given period. It is the most common summary measure of the size of an economy. Growth in GDP after adjusting for inflation is called real growth, and sustained declines in it are a key signal of recession.
Source: International Monetary Fund, Gross Domestic Product: An Economy’s All
- Recession
A recession is a significant decline in economic activity that is spread across the economy and lasts more than a few months. It typically shows up in output, employment, income and spending. There is no single official definition, and a common shorthand is two consecutive quarters of falling real GDP, while some national bodies weigh a wider set of indicators.
Source: International Monetary Fund, Recession: When Bad Times Prevail
Every term on Lever is in the money glossary.
About this module
What moves the numbers is part of Economics you can use, one of 15 subjects in Lever. It’s a short run of 5 lessons, about 13 minutes in all, so you can finish it in one sitting.
Every lesson takes one idea at a time. You read it with the math worked out step by step, answer a question that puts it to use, then see why the right answer is right and why the others aren’t.
It’s for anyone who was never taught this, and you don’t need to know anything first. Every lesson is free. Lever works out what you already know, so you can start here or let your path bring you to it.
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