Recession – Negative GD in two successive quarters

Inflation – Price hike

Stagnation – Slow/Stagnated economic growth

Stagflation – Slow economic growth (GDP growth) and high inflation

What happens usually?

 GDP growth increases  Unemployment decreases  Inflation increases (as people have
more money)
 GDP declines/economy stagnates  Inflation decreases (because people don’t have money
to buy)

Stagflation –

 GDP stagnates  Inflation still increasing --- lode lag gaye

2008 –

 11/09/2001 – 09/11 terrorist attack and other corporate scams

 Economy was tight – Feds lowered the lending rate from 6% to 1% in 3 years
 Result – Borrowers took loans at cheap interest rates for building houses.
 One major thing that goofed up – Loan was provided to subprime borrowers
