GDP and Stock Market Cycles Free Samples †MyAssignmenthelp.com

Question: Discuss about the GDP and Stock Market Cycles. Answer: GDP as A Measure of Economic Well-Being Gross domestic product (GDP) is viewed as a quality estimate of the whole economy at a particular period of time. It measures the eventual output of an economy by adding investment, total consumption, net exports and government expenditure. By dividing the GDP of a country with the total population of the country we obtain per capita income which is essentially used to gauge the standards of living of the populace. Income is however not the only determinant of well-being as postulated by many scholars and economists leading to the proposal of other metrics to determine the standards of living. GDP on its own is therefore not conclusive in determining the standards of living of the populace. The quality of life is a wide concept that that entails a variety of entities. It includes health, work status, living conditions and the subjective perception an individual has of such factors. The gross domestic product has been used for a long time as a measure of theeconomic activity of a region or country and many policy makers use it as a benchmark on which to base their decisions. Due to this purpose the GDP has been widely used to qualify the well-being of individuals. GDP is however not sufficient a parameter and has to be supplemented by the following indicators. Individuals material living standards are better monitored by using measures of household income and consumption. In the report they argue that the income of the countrys citizens is a more efficient method in measuring their well-being than the domestic production. Some parameters affect the well-being of life positively while others affect the quality of well-being negatively. A secure environment impacts a citizens well-being positively. This is because the citizen will be more productive in a secure environment than in an insecure surrounding thus increasing the well-being of the citizen. This should be factored in determining the well-being of individuals in alternative methods that include other happiness parameters like leisure and level of education and health alongside the GDP. Business cycle and its impact of a stock market crash on the business cycle The business cycle is a systematic, irregular upward and downward movement in economic activity measured by changes in various macroeconomic variables and the gross domestic product (GDP). A business cycle is always defined by four bust and boom phases. These include recession, recovery, growth and decline. These phases repeat themselves over time. The stock market crash is an unexpected instantaneous drop in stock prices eventually bringing about a major loss of paper wealth. A stock market crash could have adverse effects on the business cycle thus making the business cycle phases unpredictable and irregular. The business cycle is primarily associated with significant business trends while some analysts use the business cycle to study and understand changes in business. The business cycle is the most common indicator that investors consider when assessing whether to enter or exit the market and at what particular event of the cycle. Stock market crashes are thought to be caused by a continued period of increasing stock prices and extra economic positivism With more money in the stock market the stock prices tend to rise significantly. The business cycle plays a role in determining when an investor or a new player enters the market depending on the potential of such a decision to make a loss or a profit. Inflation is as a direct result of the phases of the business cycle. Inflation sets in during or after the boom and affects the stock market majorly. A stock market crash brings about an increase in the interest rates which may lead to slowing economic growth. This affects the typical businesses bringing about low profits, lower sales and lower revenues. This eventually destabilizes the business cycle and could bring about irregular phases of market boom and bust. The stock market crash has a considerable effect on investment portfolio. The stock market crash affects stock market cycles for instance the duration of the bull and bear markets. The bull and bear markets are directly related to the business cycle phases and a change in their occurrence equals a change in the business cycle. Australia Thailand Economic Relations Australias economic relations with Thailand have led to both positive as well as negative impacts on the welfare of Thailand as a whole. In particular, Thailand as a nation remains a very important partner to Australia. In essence, as a trading partner, Australia has contributed to a number of impacts, both negative and positive, to the economic growth and welfare of the Thailand nation over the decades. The total two-way trade between the two nations between the years 1996 through 1997 was approximately 2.76 billion dollars, which was an increase from only 508 million dollars in the period 1986-87. The services trade as well as investment levels among these two nations have significantly remained low, though it has been increasing over the years. These relations could be both beneficial and harmful based on the relative magnitudes of trade creation as well as diversion between Australia and Thailand. One of the positive impacts resulting from these relations on the part of Thailand is that it has led to increased bilateral merchandise trade between the two nations. As a result, this has resulted in modest trade development, without any detected diversions effects. Another positive impact resulting from the relations on Thailand increased infrastructure in the nation of Thailand, particularly in terms of power, environmental management, as well as telecommunications. For instance, the rural parts of Thailand posses a range of infrastructural as well as industrial growth needs. In addition, social infrastructure including transport links for roads and railways and airports have been greatly developed. Besides, healthy services and education has also improved in Thailand over the time. Other important positive impacts include increase in the level of tourism from Australia, which has contributed to the increased construction as well as management of tourism facilities in Thailand, with a major increase in the area of eco-tourism. Technology transfer from Australia to Thailand has also been another important area. Because of increased transfer of technology for instance, Thailand has experienced higher value-added manufacturing in addition to technology-based industries such as software use. However, one of the negative impacts that Thailand has experienced from the economic relations between itself and Australia include triggering of competing bilateral agreements, which has significantly whittled away the advantages that the cooperation confers Bibliography Bolten S 2000, Stock market cycles: a practical explanation, Westport, Conn, Quorum Books. https://site.ebrary.com/id/10017887. Clark A Senik C 2015, Happiness and economic growth, Lessons from developing countries. Corby, Oxford University Press. Department of Foreign Affairs and Trade (DFAT) 2011a, Thailand-Australia Free Trade Agreement. Available from: https://www.dfat.gov.au/fta/tafta/index.html. Kassenboehmer S Schmidt C 2011, Beyond GDP and back: what is the value-added by additional components of welfare measurement? London, Centre for Economic Policy Research. Haciog?Lu U Dinc?Er H 2017, Global financial crisis and its ramifications on capital markets: opportunities and threats in volatile economic conditions. Meier GM Stiglitz, JM 2001, Frontiers of Development Economics: The Future in Perspective, New York: Oxford University Press. Stiglitz J, Sen A Fitoussi J 2009, Report by the commission on the measurement of economic performance and social progress, Paris: Commission on the measurement of economic performance and social progress.