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HomeHomework HelpeconomicsFinancialization and Economic Stability

Financialization and Economic Stability

Financialization refers to the increasing dominance of financial motives, financial markets, and financial actors in the operation of domestic and global economies, which can influence resource allocation and economic stability. Economic stability, in this context, pertains to the resilience and predictability of economic systems, characterized by steady growth, low inflation, and minimal volatility, thereby fostering an environment conducive to sustainable development and investment.

intermediate
3 hours
Economics
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Overview

Financialization is a significant phenomenon in modern economies, characterized by the growing influence of financial markets and motives. It affects how businesses operate, invest, and distribute income, often leading to increased volatility and income inequality. Understanding financialization is ...

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Key Terms

Financialization
The increasing importance of financial motives and markets in the economy.

Example: The rise of hedge funds is a sign of financialization.

Economic Stability
A state where an economy experiences constant growth and low inflation.

Example: A stable economy has predictable inflation rates.

Investment Patterns
Trends in how and where investments are made.

Example: Investors may favor tech stocks over traditional industries.

Income Distribution
How income is shared among individuals in an economy.

Example: Income distribution can be measured by the Gini coefficient.

GDP (Gross Domestic Product)
The total value of goods and services produced in a country.

Example: A rising GDP indicates economic growth.

Inflation
The rate at which the general level of prices for goods and services rises.

Example: High inflation can erode purchasing power.

Related Topics

Globalization
The process of increased interconnectedness among countries, affecting trade and finance.
intermediate
Behavioral Economics
The study of psychological factors influencing economic decisions.
intermediate
Macroeconomic Policy
Government policies aimed at influencing the economy as a whole.
advanced

Key Concepts

Financial MarketsEconomic StabilityInvestment PatternsIncome Distribution