The difference between debt and equity.

• Equity is all the assets, physical and financial, which people own.
• What is Equity?

  Equity is all the assets, physical and financial, which people own.
• Debt, by contrast, is what people owe: that is, their liabilities
• What is debt?

  Debt, by contrast, is what people owe: that is, their liabilities
• What are debts also called?

  liabilities
• What is secured debt?:

  • Secured debt is debt that is backed by a collateral
• What is secured debt?

  debt that is backed by a collateral
• What is an example of secured debt?

  housing mortgage
• What is unsecured debt?:

  • Unsecured debt is debt that is not tied to any asset as lenders rely on credit history and income to decide whether to lend
• What is unsecured debt?

  debt that is not tied to any asset as lenders rely on credit history and income to decide whether to lend
• Benefits of debt:

  • Increase borrowing leading to increased consumer spending leading to multiplier effect
• Benefits of debt:


  • Increase borrowing leading to increased consumer spending leading to multiplier effect
• Disadvantages of debt:

  • High debt leads to decreased spending during downturns increasing cyclical instability
• Disadvantages of debt:


  • High debt leads to decreased spending during downturns increasing cyclical instability