This essay talks about the existence of interaction between the stock markets and the real economy. The link between real economy and financial markets has been clearly identified and evaluated. The mechanism of the interaction is demonstrated in the essay…
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In this perspective, recorded economy includes all economic activities within a country that are recordable and reported through gathering of appropriate statistics (Bailey 78). Non-monetized economy on a different perspective refers to all economic activities that are linked to self-consumption. Therefore, real economy is a composition of all the aspects of economic activities within a given nation. Overview of Financial Markets Financial market on the other hand refers to a place where buyers and sellers (individuals and entities) meet to trade on assets that include equities, currencies, derivatives, and bonds. In most cases financial markets are referred to as stock markets. Amazingly, financial markets are as old as humanity. Financial markets started the moment mankind settled down to engaging in serious activities of growing crops and exchanging them with other crops. Despite this aspect of trade was known as barter, there were some financial markets aspects within the trade. For instance, there are possibilities that some people due to one reason or another attain bad harvest (Levinson 99). However, with the bad harvest such individuals had to struggle and obtain a way of farming and obtaining food for their families. In so doing, there was the aspect of obtaining credit hence the assertion that financial markets are as old as humankind. With advancements and developments, financial markets in the contemporary business environment have taken a totally different shape. There are many forms of financial markets currently all of which have their specific purposes to accomplish. In addition, financial markets developments and advancements have led to formation of highly organized markets like the...
This essay attempts to create an understanding of the link between real economy and financial markets, adding to the numerous debates, articles, and studies on the link between financial markets and real economy
Real economy is part of economy concerned with actual production of goods and service within a country. Real economy in most cases is referred to as the total economy, which encompasses all the economic components such as economic activities, both monetized and non-monetized transactions, official and unofficial, and all transactions or activities that take place between rural and urban areas
Financial markets serve functions in which they are formed or mandated to within a given economy. The first fundamental function that financial markets perform is that of setting price. Through determining the exchange rates, financial markets have the vista of providing price discovery. The second fundamental function of financial markets is the valuation of assets. Through determining market prices, financial markets are in a position of valuing assets
Economists believe that a powerful measurement of economic performance is only attainable through obtaining a marginal value of wealth from asset markets.
Other than the fact that real economy impacts positively and negatively on financial markets, it is inevitable that financial markets also affect real economy either positively or negatively. In most cases, real economy benefits or is disadvantaged from the various functions of financial markets.
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(“Financial Markets and the Real Economy Essay Example | Topics and Well Written Essays - 4000 words”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1396956-financial-markets-and-the-real-economy
(Financial Markets and the Real Economy Essay Example | Topics and Well Written Essays - 4000 Words)
“Financial Markets and the Real Economy Essay Example | Topics and Well Written Essays - 4000 Words”, n.d. https://studentshare.org/macro-microeconomics/1396956-financial-markets-and-the-real-economy.
According to economywatch.com (n.d.), U.S. real estate is one of the largest markets in the world. In addition to U.S. economy, it has a great influence in world’s economic activity that access to easy money and following Housing Bubble initiated the Sub-Prime Crisis that led to global Financial Crisis of 2008-2009 which had huge impact on the world as a whole.
“The tax would impact financial transactions between financial institutions charging 0.1% against the exchange of shares and bonds and 0.01% across derivative contracts”1. However, the proposed tax system will not have an impact on citizens and businesses.
Financial directors make decisions in such environments like the financial markets, financial institutions, taxation and legal instruments as well as the nature of the region's economy. In addition to that, the financial atmosphere both determines the existing monetary substitutes and the influences that come out from many decisions.
Now, the question is how an individual invest. He/she may begin to build up his financial assets in order to pay for long term financial goals. He/she may want assets accessible to make down payments on housing and may also want to guarantee that human capital is low risk by buying disability insurance and term insurance (Schewart, 1999, pp.1-2).
Financial markets and sovereign debt. Financial markets and sovereign debt Introduction Just as is the case with the common notion of market, financial market is a platform in which people as well as other entities interact to trade on financial securities, valued fungible items as well as other committees at relatively lowered costs of transaction with prices reflecting the state of supply and demand.
They channel the funds from firms, households and the governments which they have surplus funds to those who have shortage of funds as they spend more than their level of income. Primarily governments, corporations, households, foreigners have excess funds with them and hence they lend them.
Defining what the authorities consider as affordable in the local plan area in terms of the relationship between local income levels and house prices or rents for different types of household. There should also be an indication of the number of affordable homes that have to be provided in a plan area, including the different types of affordable housing needed by households of different characteristics, taking account of both rural and urban needs.
First, governments have been running on budget deficits for longer than two decades. Secondly, prospects for global growth have been deteriorating over the past few months. Third, there is a growing sense of unease among many sensible people about government’s
The various types of financial institutions include clearing banks, investment banks, saving banks, building societies, insurance companies and pension funds. These operate in a competitive financial market where the objectives of firms are met. The objectives of the firm include profit maximization, wealth maximization, employee welfare, etc.
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