Complexities of the U.S. Financial System

In: Business and Management

Submitted By bhays8
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Assignment 1: Complexities of the U.S. Financial System

Brandi Hays
Professor Umair Warsi
FIN100
February 1, 2015

The impact of the US financial markets on economy is quite high. This is because of all the major companies that are listed in the Stock Market contribute towards the economic growth of the country. When their performance deteriorates, their overall rating in the Stock Market suffers a downward trend. Thus, it produces a negative impact on the US economy. Though, in some cases, the dynamics of the Stock Market has its own issues and does not produces any impact on the economy. When the global financial crisis occurred in the USA in 2008, the overall Stock Market crashed which showed a negative trend of the economy. Therefore, these issues reflect the impact of US financial markets on economy.

The impact of the US financial markets on the businesses is even there. When the overall position of the market is favorable, the businesses experience a positive impact. Though, this is not a usual case because some businesses flourish purely on the basis of their performance not on the basis of Stock Market position.

When the US financial markets perform well, the individuals in an economy also have confidence in many aspects. They are not hesitant to spend money on the goods and are able to borrow money from the banks in order to have various types of expenditures. In some cases, the negative position of the US markets discourages the consumer to spend money freely in the economy. The example is of the Global Financial Crisis that occurred in the year 2008.

The Federal Reserve System, known as Fed, is the central bank. It is an independent government authority that pursues a dual mandate: price stability and maximum U.S. employment. The primary role of FED is to influence monetary and credit conditions in the country with the help of…...

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