How an Economy Grows and Why It Doesn’t:
Natural Disaster- They come when you least expect them and you probably would not have time to prepare for it. Depending on what type of natural disaster it is, it could wipe out your whole savings and capital. In the story Baker and Charlie had just finished their net that was actually installed into the water. It was a bigger net and was able to catch more fish with it. When the natural disaster was over, they had lost everything. If you do not make good savings decisions then if something like a natural disaster comes a long, you pretty much have lost everything. 2.
Unnatural Disaster- This kind of disaster can be prevented. I would consider inflation, stock market crashes, and recession to be where we are right now in current day times. With today’s politicians, they just do not seem to want to get us back on track with a healthy economy. 3.
Loans- When giving out loans you need to make sure that the people will be able to pay them back within a timely manner and with an interest so it is worth your while. Within the story no one ever wanted to risk loaning each other anything because no one would ever get the most out of it. Healthy Economy:
Capital: Able was the first one to have capital. After trying to catch fish with his bare hands, he decided that he needed to find a better way to catch the fish. He then came up with the idea of building a net for the fish. Later on Baker and Charlie made an even bigger net; therefore, they had more capital than Able did in the beginning. 2.
Savings: Since Able was able to build the net for himself; he had created capital and with that capital he had created he was able to then create savings. Having savings is always a good idea. Then just in case something happens there will always be a back up. 3.
Expansion: Expanding capital and savings can either be a good thing or a bad thing. With the story it ended up being a good thing for Baker and...
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