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In: Economics

It is said that economic crises (such as the economic recession) can be expected through the...

It is said that economic crises (such as the economic recession) can be expected through the performance of financial markets in the period prior to them.

1- What is meant by that?

2- What is your personal opinion?

Solutions

Expert Solution

Ans) The recession is accepted to happen when Gross Domestic Product (GDP) drops for two continuous quarters and when joblessness ascends by 1.5 percent or more in a year. The economic downturn that occurred in 2008 significantly affected the prosperity of a bigger area of certain populace across numerous nations. All the sectors that contribute to the GDP are linked to financial market. The impact of downturn was obvious in the securities exchange likewise in view of the co reconciliation and internationalization of the securities exchange with other remote markets and economy. So it can be said that the economic crises can be expected through the performance of financial markets in the period prior to recession.

However, in my opinion, it is not always necessary that financial market and recession go down together. It is not actually possible to forecast recession as we won't realize we are in a downturn until we have been in for a half year.

Rahul Sunny answered 6 months ago
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