Here a good question I found in the comments section of a previous post. ‘The Dude Minds’ asks us the question:

I’m a complete dummy when it comes to economics, so please use the simplest of terms. The problem I find when trying to learn about online is that each economic term is defined by utilizing 3 or 4 other terms that leads an endless line of specialized terms defined by even more terms. Also could someone define gold standard currency and fiat money, in laymans terms?

Answer: I don’t understand the terms very well either, but here is what I do know: Gold standard money is money that has an equivalent amount of gold backing it. Fiat money is money printed by a government that has value only because the government says it has value. (Think about the Civil War, and how afterward Confederate money was worth nothing.)A recession happens when the Gross Domestic Product is getting smaller instead of larger over a time period of 6 months or more.The GDP is based on people buying and selling manufactured goods. If people buy a lot, more products have to be manufactured, the GDP goes up.When people stop or slow down buying products, less has to be manufactured and the GDP goes down. This is bad Inflation is when prices of things are artificially increased for no apparent reason, like gas being $4 a gallon. This artificial price increase should lead to an increase in GDP, because more dollars are being spent, but it really doesn’t because inflation is causing more dollars to be spent for a fixed amount of product. No extra goods are being produced, but more money is flying around. That’s inflation. Does that help ?

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