Contagion In Economics
Contagion, in financial terms, refers to the diffusion of economic booms, and can occur both domestically and globally. It is basically a spread of an economic crisis from one region to another, and spreads on an international level due to the global market interdependence.
The term contagion was coined during the 1997 Asian financial crisis, but it was occurring namelessly even during the Great Depression in the 1930s.
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Developing countries and emerging markets are often more susceptible to be affected by a contagion, whereas large, established markets can weather them to a greater degree.
Periodic, global financial crises has been a staple of the economy for every decade since 1825, in one form or another.
A financial crisis is often associated with a panic or a bank run where investors sell off assets or withdraw money from savings accounts.
The law of comparative advantage was first mentioned in 1817 by English economist David Ricardo.
A company has a comparative advantage when it is able to provide a good or service at a lower opportunity cost than others, helping it sell the same product at a lower cost, resulting in better margins.
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