EBK PRINCIPLES OF MACROECONOMICS
12th Edition
ISBN: 9780134079592
Author: Oster
Publisher: YUZU
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Question
Chapter 14, Problem 1.2P
To determine
Impact of stock market crash on different economies.
Expert Solution & Answer
Explanation of Solution
Asia experienced stock markets crash in 1997, as a result, Hong Kong’s was down nearly 30 percent, Thailand’s was down nearly 62 percent and Malaysia was also down around 60 percent. Situation was same in Japan and Korea. Such large drops negatively affect the wealth of households in these countries. Therefore people starts to spend less. As a result consumption decreases which leads to decrease in
These events also affect U.S economy very badly. Mainly, there are several Americans are invested in foreign countries. Therefore when the stock markets collapsed in Asia, would create a modest wealth effect in the U.S market. Another problem faced by the U.S economy was, when the recession occurs in the foreign countries mean that, they would reduce the consumption from the U.S economy as a result, the export demand of U.S falls. Finally, one of the main problem was import prices from Asian countries would fall when these countries compete with U.S firms.
Economics Concept Introduction
Concept introduction:
Stock market: Stock market can be defined as the place where the buying and selling of equities or stocks of publically held companies.
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Students have asked these similar questions
The graph below is associated with a hypothetical country. Consider a decrease in aggregate demand (AD). Specifically, aggregate demand shifts to
the left from AD₁ to AD2, causing the quantity of output demanded to fall at each price level. For instance, at a price level of 140, output is now
$200 billion, where initially it was $300 billion.
PRICE LEVEL
170
160
150
140
130
120
110
100
90
0
100
+-+
I I
200 300 400 500
OUTPUT (Billions of dollars)
AD1
AD2
600
700
800
?
Aggregate Demand and Aggregate Supply - End of Chapter Problem
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response to a lower price. You, however, insist that this represents a rightward shift of the aggregate demand curve.
Suppose that a vaccine manufacturing company
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Chapter 14 Solutions
EBK PRINCIPLES OF MACROECONOMICS
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