How the Stock market affects the economy?
（Nowadays a lot talking is going on about Stock market.
How its affects the economy when the Sensex(?) goes up/down?
How it is related to the Recession happening in many of the companies?
Please tell me the basics.）
Answer：
Companies get their funds from stocks that are purchased by the public. This way the person who buys the stocks of a company becomes its shareholder. As and when companies get funds, there is more production and more jobs. As a company expands, its revenue rises and so does the stock price. This attracts more investors, which means more funding and more growth. A booming stock market indicates that the economy is in fine shape.
Posted: July 27th, 2010 under US Stock Market.
Tags: Stock market, Stock market affects, Stock market affects the economy