Essay about Gdp Vs. Stock Prices

Essay about Gdp Vs. Stock Prices

Length: 1956 words (5.6 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Research Paper: GDP VS. Stock Prices
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. [ (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? [ (by Jerry Bowyer)] What is the difference between the stock market and GDP? ...

... middle of paper ...

...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.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Book Value: The Chanllenges of Investing in The Stock Market Essay

- Introduction The idea of investing in the stock market is at times challenging. Heightened activities witness the stock market itself. These activities gained the investor’s interest increasingly. The stock market patterns have changed due to the current globalization and integration of the subsequent markets. Just to name some of the global markets are New York Stock Market, Hong Kong Stock exchange among others. Sometimes these market patterns have changed due to politico-economic backgrounds (Hamid Faruqee, 2008, p....   [tags: stock market, shares, economy]

Better Essays
1790 words (5.1 pages)

An Analysis of Gross Domestic Product (GDP) Essays

- An Analysis of Gross Domestic Product (GDP) The current state of the economy in the United States has been slow in recent months. While the economy is not currently in a recession, we may eventually fall victim to the first recession we’ve had in nearly ten years. The economy in general is showing growth, just not much. It will be difficult to predict what exactly will happen to the US economy in the future. Many economists do not agree on what will become of the economy. Some feel that we will begin a recession over the next year, and some feel that there is significant policy implementation that will allow us to dodge a recession and regain our economic strength....   [tags: GDP Economy Economics essays papers]

Better Essays
1871 words (5.3 pages)

The Co Movement Of The Shanghai Stock Exchange Index Essay

- The purpose of this dissertation is to compare the co-movement of the rate of returns of the Shanghai Stock exchange Index with the price indexes in the stock exchanges of other BRICS countries before and after the establishment of the BRICS. Studying the co-movement of variables among the world market is an important field in finance and economics. From 1990s, there are 1994 Mexico economic crisis, 1997 Asian Financial Crisis, 2001 dot-com bubble, and 2007 Global financial crisis. All of these financial crisis cause serious damage not only in the country where the financial crisis was first occurred, but also in the other countries in the world....   [tags: Stock market, Stock exchange, Brazil]

Better Essays
700 words (2 pages)

The Gdp Growth Rate Over The Past 10 Year Period Essay

- 1) What is the annual US GDP growth rate over the past 10-year period (2004-2014). Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 GDP Growth Rate 3.8% 3.3% 2.7% 1.8% (0.3)% (2.8)% 2.5% 1.6% 2.3% 2.2% 2.4% The GDP Growth in these 10 years as CAGR has been 3.7% and GDP growth dollars is 5.431 Trillion USD 2) What is the inflation rate over the past 10-year period (2004-2014). Explain the inflation rate. Year 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 AVE % Inflation 2.68% 3.39% 3.24% 2.85% 3.85% (0.34)% 1.64% 3.16% 2.07% 1.47% 1.62% The formula for calculating the Inflation Rate using the Consumer Price Index (CPI) is relatively simple....   [tags: Stock market, Market capitalization, Inflation]

Better Essays
1155 words (3.3 pages)

Gdp Capita And Measure Economic Growth Essay

- 1. Economists use real GDP per capita to measure economic growth: A) because it ignores the effect of price changes. B) because poor nations have a large population and the population of richer nations is declining. C) because it is the inflation-adjusted value of a country 's production of goods and services corrected for the change in a country 's population. D) even though nominal GNP per capita is a far superior measure of economic growth. Use the following to answer questions 2-5: Scenario: Growth Rates Suppose that real GDP per capita of the United States is $32,000 and its growth rate is 2% per year....   [tags: Economic growth, Economics]

Better Essays
1152 words (3.3 pages)

The Fiscal Policy and its Impact on the GDP Essay

- ... Firms may lay off employees, because they are not making a profit and one way to reduce overhead costs is to diminish the work force. With a debt, money that could be circulated within the market to help increase jobs, is now being spent on the debt. University of Phoenix student With all the pressures of being a student at the University of Phoenix, paying back a loan should be the least of our worries. Unfortunately, the way in which the economy is the average student stresses about how they will pay the loan off....   [tags: the country's economy]

Better Essays
1096 words (3.1 pages)

Factors Affecting The Economy Of The Country 's Gdp Economic Output Essay examples

- GPD, these components are 1) Personal consumption 2) Business Investment (near and dear to my Uncle Ed) …3) Government Spending and 4) Net Exports of Goods and Services. The GDP growth rate calculates and determines how fast the economy of any country grows. This is determined by comparing various quarters of the country 's GDP economic output against a particular quarter. The GDP growth rate is the most important indicator of economic health. When the economy is expanding, the GDP growth rate is positive....   [tags: Economics, Gross domestic product, Macroeconomics]

Better Essays
1478 words (4.2 pages)

Essay about Links Between Stock Markets and Economic Growth

- Townsend’s (1979) study was motivated in part by questions of optimal regulation of financial institutions such as intermediaries, and it suggests a simple theory of intermediation and avoid the difficulties associated with non-convex technologies using a game theoretic approach “non-cooperative game theoretic model”, and it is described in which exchange is motivated by risk sharing considerations. Through liberalization of interest rates and other restrictive; equity markets may improve allocation efficiency....   [tags: Economics ]

Better Essays
1164 words (3.3 pages)

The Effects of Monetary Policy on Macroeconomics, GDP, Unemployment, Inflation and Interest Rates

- Introduction Economics primarily focuses on how laws and government policies impact the economy. Much of this looks at taxes specifically and more generally the public finance, which includes the spending and borrowing the government does. The root word of economics is economy. Economy comes from the Greek oikos - home and nomos - managing. (Dkosopedia, 2006) Economy can be described as the current soundness of financial indicators such as jobs and job growth, economic productivity and output, and can also be measured by a vast range of other factors such as the trade deficit, national debt, GDP, and unemployment rates....   [tags: Monetary Policy Essays]

Free Essays
1607 words (4.6 pages)

Essay about Strong Economy and Its Effect on Financial Market

- Following the trend of economy, it is important to investors to understand that strong economy creates strong stock market. To elaborate further, as stock prices are increased by current and future expectations of earnings, thus without a strong economy it would be difficult for the companies to increase and sustain their earnings (Kong 2013). The economy development is usually calculated using the gross domestic product of a countries. On the other hand, a change is the stock price can also cause a major impact to the consumers and investors directly....   [tags: stock market, capital markets]

Better Essays
902 words (2.6 pages)