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Effect of Stock Market on U.S. Economy

The purpose of this research is to examine the ways in which the stock market in the United States affects the nation's economy. For purposes of examination, the economic effects of the stock market are considered in the contexts of the stock market as (1) a business activity in its own right, and (2) as a financial institution.

THE STOCK MARKET AS A BUSINESS ACTIVITY

As a business activity, the various stock markets in the United States, together with their member firms, (1) provide employment to a substantial number of individuals in the United States, and (2) are consumers of goods and services produced by nonfinancial institutions. In this context, the stock market may be viewed only in positive terms, although there are limitations to the overall positive impact of the business activity of the stock market. The two limitations of greatest significance on the positive impact of the stock market as a business activity are (1) the relation of this business activity to the overall economy, and (2) to concentration of the impact of the stock market as a business activity. First, the overall level of output of the stock market as a business activity is relatively insignificant when compared to other industries in the

1 2American economy. Second, although stock broker members of the various stock exchanges operate branch offices in most urban areas in the United States, the major benefits of the stock market as a business activity are localized to New York City.

The major effectsboth positive and negativeof the stock market on the American economy occur within the context of the stock market as an institution. For business organizations, the stock market as an institution provides a source of capital, and provides opportunities for business organizations to lower their cost of capital. For individual residents in the United States, the stock market provides a venue for investment. Investment in the stock ma...

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Effect of Stock Market on U.S. Economy. (1969, December 31). In LotsofEssays.com. Retrieved 23:16, April 21, 2019, from https://www.lotsofessays.com/viewpaper/1683920.html