If stock market crashes aggregate demand

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How would a stock market crash affect aggregate demand?

If there were to be a stock market crash, how would it affect aggregate demand? And what if there had been equilibrium employment i.

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Are you sure that you want to delete this answer? I think the definition of recession differs from country to country. But I think the general definition is if the country's quarterly GDP is of a negative value for two consecutive periods.

Recession means the slowing down of the economy, whereby the demand for goods are relatively lesser, hence the aggregate demand for the country would decrease.

Since aggregate demand is decreasing, on a firm basis, sales has dropped hence they would have to reduce cost to achieve the same level of profit. One way is to retrench workers that are redundant in the firm.

When the government increases government spending, the government is developing more projects in the country, hence this creates jobs for the people and for those recently unemployed. Thats the place the present situation lies. It replaced into no longer a marketplace crash, what occurred replaced into that the U.

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Now each monetary enterprise are suspicious of dealing with eachother making an investment in each and each others investment opportunities using fact non of them be attentive to how in touch the different has been interior the sub-best marketplace and how plenty the different will finally lose. So as quickly as lower back interestingly like the shareholders and investors a similar people who're whinging bearing directly to the loan fees are the reason at the back of this situation.

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How would a stock market crash affect aggregate demand? | Yahoo Answers

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