In the 1990s, issues occurred in the recently rising markets as a result of:a.Real-world economic issues are accurately reflected in financial markets.b.The "tiger" economies of Asia fell apart.c.Asian economies' exports fell precipitously as a result of the appreciation of Asian currencies.d.Investors frequently experience a temporary increase in risk aversion due to losses in one market.
Question
In the 1990s, issues occurred in the recently rising markets as a result of:a.Real-world economic issues are accurately reflected in financial markets.b.The "tiger" economies of Asia fell apart.c.Asian economies' exports fell precipitously as a result of the appreciation of Asian currencies.d.Investors frequently experience a temporary increase in risk aversion due to losses in one market.
Solution
The issues that occurred in the rising markets in the 1990s were primarily due to:
a. Real-world economic issues are accurately reflected in financial markets: This means that any economic problems happening in the real world, such as inflation, unemployment, or political instability, will have a direct impact on the financial markets. If the economy is doing well, the markets will reflect this by increasing in value. Conversely, if the economy is doing poorly, the markets will reflect this by decreasing in value.
b. The "tiger" economies of Asia fell apart: The "tiger" economies refer to the economies of Hong Kong, Singapore, South Korea, and Taiwan. These economies experienced rapid growth and industrialization from the 1960s to the 1990s. However, in the late 1990s, these economies experienced a severe financial crisis that led to a sharp economic downturn.
c. Asian economies' exports fell precipitously as a result of the appreciation of Asian currencies: When a currency appreciates, it becomes more expensive relative to other currencies. This makes the country's exports more expensive and less competitive, leading to a decrease in exports. This happened to many Asian economies in the 1990s, which led to a decrease in their economic growth.
d. Investors frequently experience a temporary increase in risk aversion due to losses in one market: When investors experience losses in one market, they often become more risk-averse and are less willing to invest in other markets. This can lead to a decrease in investment and economic growth. This happened in the 1990s when investors experienced losses in the Asian markets and became more risk-averse.
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Cox, R. (2020). Coronavirus: How the pandemic has changed the world economy. BBC News. Kollewe, J. (2019). How does Brexit affect the pound? The Guardian. McLeod, S. (2020). Emerging markets: Definition, characteristics, and examples. Corporate Finance Institute. Samburaj, D. (2018). AI and the future of forex trading. Finance Magnates. cite in apa format
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