The Effect Of Stock Market On Gdp Growth

Investing money is a major means of generating extra cash that people often participate in. A stock market is a place where investors trade certificates of partial ownership in businesses for a set price. “Through these transactions, companies can raise the initial capital necessary for various aspects of operation, and those who buy the certificates become entitled to a portion of the business' assets and earnings (Kelsey).”

Stock markets generally reflect the economic conditions of an economy, Alfaro, Chanda, Kalemli-Ozcan, & Sayek (2004). If an economy is growing then output will be increasing and most firms should be experiencing increased profitability. This higher profit makes the company shares more attractive – because they can give bigger dividends to shareholders. If the economy is forecast to enter into a recession, then stock markets will generally fall. This is because a recession means lower profits, less dividends and even the prospect of firms going bankrupt, which would be bad news for shareholders.

Second, when the growth happens for the stock, the investor can achieve more money. Third, the investor can avoid inflation through buying stocks.

The total economic profits of the fall in oil prices are substantial. It could slightly make GDP growth in the United States go up as well. The GDP is one of the economic indicators. Also, it is not that deflation of oil prices are bad as low gas prices are good for the consumers. However, it is what oil prices may be signaling, and what they might be possibly signaling is the reduction of demand, leading to

Prompt: Analyse how aggregate demand, aggregate supply, saving, investing, business cycles, and GDP effect the nation's economy (including types of unemployment, poverty, economic growth, and inflation).

In Chapter 12 of the General Theory of Employment, John Maynard Keynes focused on examining the stock market and how it functions, in the sense of its structure and how it is affected by the behavior of investors because he believed the behavior of the stock market affects the aggregate demand, hence the rest of the economic system. He is most interested in the fluctuations of the rates of investments in the stock market that consequently affect

As of 2010 in the United States, the GDP Growth Rate is growing, the Unemployment Rate is decreasing, and the Rate of Inflation is decreasing according to the trendline with relatively large fluctuations. The current GDP Growth Rate is 2.1%, due in part by the ever increasing consumer spending throughout the United States. This growth was expected, however, it was not anticipated to grow as quickly as it has been. Nevertheless, the growth in consumer spending caused a decrease in the purchase of stocks and investments, consequently, lowering GDP. Since the United States imports more goods than it does exports, this difference in Net Trade also lowers the GDP. As for the Unemployment Rate falling at 4.7%, it is more structural than any other

The GDP growth rate per year is derived from the reported GDP (in dollars $), therefore, the GDP ($) for 2004 and 2014 is needed in order to get a single summary growth rate for all 10 years (2004-2014). According to World Bank, the U.S. GDP for 2014 was $17,419,000,000,000.00 and the GDP for 2004 was $12,274,928,000,000.00. As a result, we get an annual GDP growth rate of 3.56% over the 10 years (2004-2014).

A recession can be defined as an economic decline in gross domestic product, in which, a nation experiences a downward sloping growth rate. Additionally, recessions tend to have a time range of two or more periods/quarters of falling real gross domestic product (GDP), consequently from the negative sloping economic growth rate. In order to properly define causal factors of a recession, it is most appropriate to elucidate what GDP’s meaning.

Coming out of a lackluster 2015, GDP growth slowed to 1.5%. Confidence of investors and consumers was unable to make significant gains as a result of the Presidential election and global uncertainty. The outcome of the 2016 election had a great affect on the US economy and the fiscal and monetary policies that could be put in place. Uncertainty over taxes, regulations, and trade following the election have led to a slowdown of growth.

The problems of our stock market are given priority in our report. We tried to mention possible way outs to overcome the crisis. The reader will find the basic understanding about a stock market fist, then about the stock markets and the regulatory bodies, then some of the problems and potentials in the later part of the report. This report is the outcome of our knowledge about the financial markets and institutions what we have got in your course, and the hard work of our group members given this reports completeness. Capital market works like an engine that runs the economy of our country. It is the most lucrative investment opportunity for millions of investors. The capital gain from secondary market makes it more attractive to the potential investors. We hope that our report meet the need of understanding the present condition and taking steps necessary to overcome the market collapse.

As known, ensuring price stability was the ultimate aim of the monetary policy by targeting an inflation rate or interest rate. Before the global financial crisis, most central banks took an expansionary approach to asset price and credit booms. As a result, monetary policy was to react to changes in asset prices and credit aggregates only to the extent that they affected inflation (Bernanke and Gertler, 2000). After the crisis, policy makers recognized the dangers associated with financial imbalances so that central banks tending to follow the flexibility. In many financial markets, considering about financial imbalances like foreign-exchange rate, interest rate, unemployment rate and fast credit growth becomes a more significant role on monetary policy. Meanwhile, there is no doubt that monetary policy has a direct effect on financial markets like stock market, bond market, mortgage market and so on. The aim of this article is to focus on the relationship between monetary policy and stock market movements. There is evidence that the stock returns is affected by the money supply rate. The link between the two parts is particular interest and the stock prices are sensitive to economic conditions. Therefore, the stock prices’ trend is able to become a reflect of the monetary policy’s influences on stock market. In total, one of the ways that monetary policy uses to stabilize the financial market is to adjust interest rate, which affects firm’s equity and the stock liquidity.

The belief of macroeconomic variables influencing the stock market has been a highly debated discussion for the past decades. There has been no clear conclusion whether or not macroeconomic variables impact the stock market or inversely. The importance of this study have been increasingly critical as not only stock agents find the critical importance but the government to implement macroeconomic policy; the solid finding of this relation will enable policy makers to efficiently and effectively control the economy as well as the capital market. We aim to cover some relationship between macroeconomic indicators, including consumption, interest rate unemployment rate and inflation rate, and with stock price.

Although the long run research and studies conducted by different economists gives a very different picture of the relationship between stock returns and economic growth, but very little empirical evidences to support the view with. Many economists and researchers supported the view that, stock returns and economic growth does not have a positive

Ireland’s GDP has increased from $218.5 billion in 2010 to $245.9 billion in 2014. Per Capita GDP has also increased over the last five years, from $46,425 to $49,360 (Ireland GDP | 1960-2015, 2015). Despite overall growth, both GDP and per capita GDP experienced low growth from 2011-2013, and even negative growth in 2012. This is explained by the tight fiscal policy maintained by Ireland’s government during this time.