Chapter 20.1, Problem 4R

To determine

To evaluate: The reason for which stock market of U.S. is monitored closely.

Explanation of Solution

The economy of United States represents a major part of the world economy and so the stock market of the U.S. plays a major role in the economy. The reason for watching the stock market of U.S. closely is that the stock market of U.S. affects the market of whole world. When the stock market of U.S. drops, the market worldwide is affected. In 1987, the drop of U.S. stock market affected the whole world and many foreign stock markets took very long to recover.

In 2001 too, when the terror activities happened in the United States, the stock markets fell worldwide. Hence, as the stock market of United States affect the whole world economy, it is watched closely.

Economics Concept Introduction

Introduction:

Globalization of markets-Markets nowadays have come on global platform. The financial activities in one market affects the another as well. The markets of developed nations influence the global economy.