Chapter 20, Problem 11AA

To determine

To analyze: The impact of U.S stock market crash on rest of the world in 1987.

Explanation of Solution

A sudden and serious fall in U.S. stock prices that occurred over several days in late October 1987 was the stock market crash of 1987. Although the crash occurred in the U.S., every other major stock market in the world was affected by the disaster.

The effect of the U.S stock market crash has impacted all over the world economy because in the period of globalization all countries are interlinked with each other. It brought recession or slowdown of economic activities in the rest of the world. Apart from it, there was a severe impact on the capital balance of every country because it shows a complete downfall. The export and import fell drastically because of which there was huge unemployment in every country. Firm shout down its production unit and business lost their confidence.