Q&A: financial markets and the current economy - how do they affect each other? ?

Question by tennispimp: financial markets and the current economy - how do they affect each other? ?
i still dont get how financial markets are affected by the current economy, or how the current economy is affected by financial markets...i know we are having problems in our credit and housing markets..but hoiw does this affects, for example the Dow or Nasdaq, how the10 year/ 3 months tresury bills/bonds rates are so volatile and follow and current economic changes...if you could please elaborate how financial markets are affected by our current economy debacle, or viceversa, i would truly appreciate it..thanks a lot


Answer
Answer by Ali SThe financial market like capital market (Dow or Nasdaq) and money market (treasury bills, bonds) are highly affected by financial institutions like banks who currently get big problems from the subprime market.The credit crunch in subprime market has also slashed home prices by $ 2.5 trillion from household wealth, or about $ 25,000 per

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