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Why Is It Important to Judge an Economy's External Debt

question 104

Essay

Why is it important to judge an economy's external debt relative to its assets? (Remember: an internal debt creates an equal amount of financial assets. )Give an example to support your explanation.


Definitions:

Marginal Cost

The cost incurred by producing one more unit of a good or service.

Socially Optimal Price

A price level for goods or services that considers the wellbeing of society as a whole, often factoring in externalities.

Deadweight Loss

The diminishing of economic efficiency when equilibrium in the free market for a product or service is not attained.

Benevolent

Showing kindness or goodwill, often characterized by acts of generosity or concern for others.

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