I read an article that the US government is inducing a recession because the economy is running too “hot” compared to Europe. How is inducing a recession going to help?
In: 5
The economy is like a car engine. Right now demand is outpacing supply which is like the driver pushing the gas too hard and the engine is overheating. The fed has to increase interest rates which to makes it harder for people to spend money which is like slamming the breaks. The idea is to slow the car down so the engine doesn’t overheat, but in the process the car is going to dip below the speed limit and it will take time for it to rise back up to the correct speed aka a recession.
Latest Answers