The nostalgic definition of wealth has been developing demands for centuries. As nations grew; the power of industrialization has developed wealth to become a whole different meaning. In the medieval era, wealth was land ownership. The common working class had not yet realized the meaning of advancing in society. That was until Adam Smith in his book, The Wealth of Nations, described an ideal form of economic functionality. Smith influenced immortalizing economic conquest during the industrial revolution. Technological advancement has increased exponentially since. Smith’s idea of the whole concept of economics has been jacked to some degree, but the main idea is still implemented. As we further advanced, we discovered multiple methods of calculating our growing economy. Eventually, GDP and the stock market were also implemented to our economy.
Gross domestic product (GDP) and Stock Prices play a vast role in determining a nation’s economy. GDP can determine economic growth in percent and as well determine the aggregate wealth of a nation and compare it to various other nations. [Investopedia.com (par.1,2)] Stock Prices are the current market price value in which assets or service can be bought or sold. It also contributes to how investors devise decisions to buy or sell shares of a company. If stock prices are rising, the economy is growing. Here are some basic questions investors should answer before investing: to adhere minimal risk; Why do most investors rely on a nations GDP to make their investment decision? How does the stock market affect GDP? Does GDP predict the direction of stocks? [forbes.com (by Jerry Bowyer)] What is the difference between the stock market and GDP? ...
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...sential part of our economy. Thought economic theorist claim that these practices should stop. Mainly because consumers tend to consume less when they see the economy in a stagnation. If consumers and businesses worried less about future profits, there will be more money flow and recession may not even occur. I tend to agree with this theoretical view, because the economy is always going to face stagnation from time to time. The entire issue is worsening when consumer’s expectation about the future change. Consumer normal tend to spend less and that leaves the economy worse. Therefore, GDP and stock prices should not be used for predicting anything. I think we should reason within the logics of human psychology to deal with the economy. It comes to my understanding that using GDP and stock prices for the reason mention above lead us to continual recessions.
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