Question

Based on your reading and research, address the following in your initial post to the discussion:

When analyzing key macroeconomics to assess GDP growth/decline, how would you measure the performance relative to sequential and year-to-year data?

How will your analysis assist you in determining the direction of the stock market?

Why do you consider the relationship between the economy and the stock market an integral part of the investment process? Explain your reasoning.

Answer 1

Here is the answer of the problem.

1.

When we want to analyze the economic growth or declaine by using the macroeconomics on the basis of output, inflation, Unemployment, Business fluactuation, recession, depression,etc. Output, the most critical idea of macro economics, alludes to the aggregate sum of goods and services a nation produces, generally known as the national output. The data resumbles a preview of the economy at one point in time. when alluding to GDP, macro economists tend to utilize genuine GDP, which considers, other than ostensible GDP, which reflects in just changes in costs. The ostensible GDP figure will be higher if swelling goes up from year to year, so it isn't really demostrative to higher yiled levels, just of higher costs. They also come to concur that when the economy has seen economic growth from periode to periode, which is demonstrated in the GDP, unemployment levels have a tendency to be low. This is on the ground that with rising GDP levels, we realized that the yield is higher, and subsequantly, more workers are expected to stay aware of the more noteworthy levels of production.

2.

To analyzing the stock market the macro economics also providing some variables. All together for a financial indicator to have prescient incentive for speculators, it must be present, it must be forward looking and it must be rebate current esteems as per future desires. Important measurement about the bearings of the economy begin with the significant market records and the data they give:

1. Stock and stock market futures

2. Bond and mortgage interest rates

3.foriegn exchange rates

4. commodity prices such as Gold, Silver,etc

3.

We know that economy and stock market are highly related. The financial market development will leads to economic growth. It Increases the saving and investment habits of the people, It increases the efficiency of the capital. The ways of improvment will be shown below:

1. The increases in savings will be increases the real interest rate

2. The efficient utilization of capital will increase the positive interest rate

The stock market capitalization and money supply with economic development while add up to esteem exchanged, turnover proportion and gross capital arrangement have opposite relationship with the economic growth. market capitalization is very critical and gives off an impression being the significant securities exchange pointer.