eco note

Positive externality

refers when the actions of a person/entity result benefits for others in the society, without compensation

exemples of positivité externality

education, vaccinations, r&d

negative externality

refers to a situation where the actions of a person/entity impose cost to other of the society, without compensation

exemple negative externality

pollution, noise pollution, second hand smoke

3 points of the mechanisms of economic development by territories

• are strategies and actions that stimulate the economic growth and improve living conditions in a given area/region

• varies depending of the needing of each area

• may be influenced by the government policies, economic conditions and available resources

which are the 3 multiplier effects ?

• expense multiplier

• investment multiplier

• tax multiplier

explain the expense multiplier

is based on the idea that each expense leads to an increase in income and demand.

explain the investment multiplier

focuses on the impact of investments on the economy.

explain the tax multiplier

measures the impact of tax measures on the economy.

explain the appreciation

is when a currency experiences an increase in value when it is compared to other currencies.

explain the depreciation

is when a currency experiences a decrease in value when it is compared to other currencies.

advantage of the depreciation

• domestic prices appear cheaper in foreign markets which increases exports and promotes a trade surplus

advantage of the appreciation

• it makes foreign goods appear cheaper relative to domestic goods and keeps inflation low

how the debt works ?

allows individuals and companies to make large purchases they couldn't afford

common forms of debt

loans, emprunt, auto loans, and credit cards

how can debt can be advantageous

when used properly, such as buying a home or car

what can be convenient and helpful during emergencies

credit card

what’s the best way to stay out of financial trouble ?

Avoiding excessive debt

why debt can be risky for companies ?

• Companies may struggle to make interest payments if sales drop

• Too much debt can burden a company and limit its growths

is it also risky for the lender ?

yes so interest compensates the lender for the risk of the loan