Impact of stock market crash on different economies.

Question

Want to see more full solutions like this?

Answer 1

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 national income also. So these economies experienced recession due to the stock market crash.

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

For each of the following economic changes, predict what will happen to equilibrium interest rate and quantity of money in the financial market. Sketch a demand and supply diagram to support your answers. Banks that have made loans find that a larger number of people than they expected are not repaying those loans. 2.Because of the pandemic, people become uncertain about their economic future. 3. BSP buys dollars from the public to increase its foreign exchange reserves.

Refer to the figure at right. Suppose the equilibrium moves from E' to E. An event that could have caused this movement is A. an increase in the perceived stability of the U.S. economy. B. an increase in U.S. productivity. C. an increase in the real interest rate in the United States. D. an increase in demand for Japanese−produced goods by U.S. residents.

You are in charge of the Bank of Canada and economic indicators suggest that consumer spending and most importantly short term debt are out of control. If this continues the economic boom could burst the bubble causing a negative turn in the economy. What course of action might slow growth and prevent a negative turn in the economy?

Answer 2

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 national income also. So these economies experienced recession due to the stock market crash.

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

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 national income also. So these economies experienced recession due to the stock market crash.

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

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 national income also. So these economies experienced recession due to the stock market crash.

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.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

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 national income also. So these economies experienced recession due to the stock market crash.

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.

Answer 6

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 national income also. So these economies experienced recession due to the stock market crash.

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.

Answer 7

Chapter 14, Problem 1.2P

To determine

Impact of stock market crash on different economies.

Answer 8

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 national income also. So these economies experienced recession due to the stock market crash.

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.