Essay About You

fghfAli Al-Riyami
Mrs. Ghadi Mouallim
Summary & Answer
Every day, individual stocks or “ownership shares” of thousands of corporations are being bought and sold in the stock market. A stock market is an everyday term we use to talk about a place where stocks and bonds are "traded" – meaning bought and sold. For many people, that is the first thing that comes to mind for investing. The goal is to buy the stock, hold it for a time, and then sell the stock for more than you paid for it.
If you are an owner of individual stocks, you receive dividends-a portion of the firm’s profit. Supply and Demand determine the price of each firm’s stock, the individual stock prices rise and fall. Greater profits result in higher dividends to the stock owners, and with high hopes of higher dividends, people are willing to pay higher price for the stock.
Anyhow, when you buy an individual stock from the stock market, you are hoping for higher dividends to get higher profit from the individual stock you bought.

Answer of the question:
I believe that if the prices fall by 10% in the stock market, the lower stocks will cause a recession. A recession is a slowdown in economic activity, macroeconomic indicators such as employment, GDP, business profits and inflation fall, while unemployment rate and bankruptcies rise.
The stock market and the economy are much related. Many people look at the stock market to see how the economy is doing.   If the stock market is in a period of decline, the economy is sure to follow. The stock market somehow causes the economy to rise or fall; the stock market however does not directly affect the economy, it just shows the people what is about to happen in the economy.
However, the economy tends to move in the same direction as the stock market, so lower stock prices will slow down the economic activity and may cause a recession.