Question

why is the stock exchange i called a barometer of the economic and business condition of a country

Answer 1

Stock exchanges are not only used as a platform in order to carry

business transactions but they are the barometers that helps in

indicating the general conditions of the business atmosphere. One can

measure the economic and business conditions with the help of stock

exchanges as they provide real and accurate information about the

companies. Prices of securities rise during economic and business

prosperity periods. When economic stagnation occurs or business

activities slowdown due to depression in the markets, prices fall.

Security prices change with the change in economic, social and

political conditions.