Essential economic concepts

Résumé fourni par la source

This chapter relates to financial markets a number of assumptions, economic, financial as well as psychological fallacies that render the thinking process and ultimately the decision made either incorrect or invalid. Several well-known and useful economic laws or principles are presented. We discuss some very important economic assumptions in order to properly study economic events and phenomena and ‘predict’ the outcome from one or many changes in the variables. These basic, implicit economic assumptions are necessary when discussing economic/financial news and events and when involving entities, markets and individuals. We also present several fallacies or biases that humans have suffered from all of which lead to incomplete, incorrect or even misleading decisions. We categorize them into economic, financial and psychological aspects.