Suppose That There Is a Stock Market Crash in Which

question 102

Essay

Suppose that there is a stock market crash in which the market loses twenty percent of its value in one day. Furthermore, assume that the crash leads to further pessimism that the market will crash again. What likely impact will this have on GDP and why?

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Definitions:

Adjusting Entries

Accounting entries made to adjust the books of accounts to reflect the true financial position and performance of a company at the end of a financial period.

Salaries Expense

The total amount recorded by a company for the salaries of its employees.

Salaries Payable

An account reflecting the debts to workers for performed but unpaid work.

Closing Entry

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, ultimately resetting the balances of temporary accounts to zero.