The Stock Market
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Business economics is concerned with economic issues and problems related to business organization, management, and strategy. Issues and problems include: an explanation of why firms emerge and exist; why they expand: horizontally, vertically and spacially; the role of entrepreneurs and entrepreneurship; the significance of organizational structure; the relationship of firms with the employees, the providers of capital, the customers, the government; the interactions between firms and the business environment.
The stock market and the economy are closely linked in many investors’ minds. This is understandable given that media coverage often blends the two as if they were the same thing. But that does not hold true.
While the stock market may respond to economic indicators or news, it doesn’t always respond in the manner that makes sense.
The economy is a way of defining all we make, buy, sell and consume. The stock market is part of the economy, however its focus is very narrow, confined to securities that represent, for the most part, the largest and most robust companies.
Many times the economy and the stock market move in the same direction, which is when people say the market is upor down.
HOW DOES THE ECONOMY EFFECT THE STOCK MARKET:
The is measured after-the-fact (unemployment was down last month or export sales climbed in the most recent quarter). The stock market on the other hand is looking at the future.
Stock investers may decide when the economy is down, to buy more. This raises the stock, even though the economy is down.
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BY MR. REPORTER