CHAPTER 01 INTRODUCTION 1.1 Introduction This study shows you the consequences of oil prices on Stock exchange. The industries prices totally based on the oil prices. Oil price have direct and indirect impact on the economy of any develop and under developed country. The rising oil prices are the major concern for all the developing economies and Pakistan is facing it too. The increase in oil price has further effect the daily consumption pattern of households’ badly.
INTRODUCTION Economic growth is defined as the increased capacity of an economy to be able to produce goods and services in comparison from one period of time to another. This is figured by the genuine Gross Domestic Product (GDP) and development, and is measured by utilizing genuine terms such as “Balanced Inflation”. These terms help to remove any distorted views on the perceived outcome of inflation on the cost of merchandises produced. Likewise, Economic growth is related to the high expectations in a person’s standard of living. If the standards are high, it wouldn’t be beneficial for the economy as the working class individuals will face a lot of trouble.
GROSS DOMESTIC PRODUCT “The gross domestic product of a country is a measure of all of the finished goods and services that a country generated during a given period. GDP gives best measure of health of country’s economy. It is the number calculated by consolidation of total expenses of government, money spent by business, private consumption and exports of the country. Increment in GDP indicates economic growth. Foreign investors get attracted towards the countries with economically strong countries with good GDP.
2.1.2 CONCEPT OF ECONOMIC GROWTH There are different meanings among scholars, about the concept of economic growth. For example, while Herrick and Kindleberger (1983) put it that economic growth involves employment of factors of production in order to produce a higher level of outputs that can improve the quality and standard of living of the people. Economic growth does not only come from expansion or physical factors but due to improvement in both human and physical as well as volume trade (Ranis et al (2000) and Jhingan (1985) cited in Gafar et al (2011)). Ranis et al (2000) in particular, posits that economic growth is a two way relationship. First economic growth induces development of human resources where with increased economic activities
1.1 Research Background Volatility can be defined in several terms. Statistically, it refers to a level of uncertainty or variation of financial assets varying over time, which measured by standard deviation or variance (Baybogan, 2013). It is commonly applied in order to evaluate the risk of financial assets. Generally, assets with high volatility, the prices of these assets could dramatically fluctuate in a wider range over a short period of time. In the other word, it can be said that a higher volatility implies a higher risk of assets.
1.Definition of the macroeconomic variable a) Economic Growth A rise in the capacity of an economy to produce goods and services, compared from one period of time to another. Economic growth can be considered in nominal terms, which contain inflation, or in real terms, which are adjusted for inflation. The increase of an economy is thought of not only as an increase in productive capacity but also as a development in the quality of life to the people of that economy.Increase in the capital stock, advances in technology, and improvement in the quality and level of literacy are considered to be the principalcauses of economic growth. Two main factors of Economic growth are an increase in aggregate demand and aggregate supply. b) Inflation
The factors that contribute to the volatility of investment spending in investment are changes in interest rates. Interest expense is a cost of making an investment. Therefore, it will affect the profitability of potential investments. Other than that, expectations about the state of the economy in the future also causes this volatility in investment. When firms are optimistic about the future, investment spending increases, and vice versa.
In the last 50 years, agriculture is considered to be the main reason for Pakistan's economic development. More than 60% of Pakistan's population is dependent on agriculture for their livelihood. The importance of agriculture in economic development 1- The increase in per capita income Per capita income is the annual income of a country. Because many unemployed people find work
Normally interest rate is high in an economy. It will be control the inflation but other hand it has a negative impact on economy by slowing down the economy activates. Interest rate is most important factor for government and financial institutions to get more information about variables that can affect interest rate to fluctuate. Normally interest rate mean everything stated by state bank of Pakistan (SBP) funds rate to any of treasury bill yield to ten years fixed deposit
Thus, we know that economic growth in a country is strongly related with its productivity. The increasing of productivity will brings the increasing of economic growth. The increasing of productivity in a country means the ability to produce more goods and service with the same amount of inputs. Also, there are many indicators to determine the economic growth, such as high saving rates, high income (that will drive the higher GDP), and the number of employment. A country can be categorized to have an economic growth if they are having an improvement in terms of their productivity and the indicators that will determine the economic growth.