Question

Using the information you have learned so far in this class, state what you think will cause market fluctuations over the next few years as the economy struggles to recover.

Answer 1

ANSWER:

Given that

we know that

• The market trends allow trade and investors to capture profits, the flow from one price to another is what creates profits or losses. The major factors that shape trends can be summarized below:
• Governments hold much sway over the free markets. Fiscal and monetary policies have a profound effect on the financial market place. By manipulating interest rates, the government and the Federal Reserve can slow or attempt to speed up growth rate within the country.
• The flow of funds between countries impacts the strength of a country’s economy and its currency. This money can be reinvested and can stimulate the financial markets in the country.
• Speculation and expectation are integral parts of the financial system. Expectation of future action is dependent on current acts and shapes both current and future trends.
• Supply and demand creates a push-pull dynamics in prices. Prices and rates change as supply and demand changes. It is important to understand how all these elements come together to create trends. As of now, many want to believe that there is a recovery but it’s just invisible. We need to be confident that government at all levels will cut spending and stop incurring debt which will inspire consumer confidence as they begin to invest their savings again.