As mentioned by the presenters during the presentation in regards to Financing, the stock market can be quite dynamic in terms of its behaviors as the changes can be affected by multiple factors. The bank of Japan has astounded the stock market on Oct.30 when it made a surprising announcement of its expansion in the asset-buying program. The announcement alludes to the struggle Japan faces in a declining economy.

In my opinion, while the bank of Japan’s intended expansion may sound surprising at first, it seems the monetary expansion is an inevitable move due to a combination of economic and political factors. As skepticism rises towards “Abenomics”- series of measures introduced by Prime Minister Shinzo Abe promised to promote economy growth, the announcement represents the government’s determination in the eradication of the deflation. Furthermore, with the increase of the sales tax already implemented in April and another potential tax hike for 2015 yet to be decided, the increase in levy will augment Japan’s already huge financial burden in public debt.

Although uncertainty remains in the move of increasing the purchase for stocks and bonds, the expansion will place positive as well as negative impact upon the country. Growth for economy will indeed be promoted in the long run due to the consequent devaluation of the currency. As the value of the yen decreases, the demand for the now cheaper exports will increase and thus promoting the economy of Japan. However, such growth also means an increase in the price of imports and will result in a decline in the standard of living.

Sources of Images (in order):

(http://i.guim.co.uk/static/w-460/h–/q-95/sys-images/Guardian/Pix/pictures/2014/10/31/1414760700420/54a28552-31e8-43b4-9287-249c2159412c-460×276.jpeg)

(http://www.nippon.com/en/files/g00087en_fig01.jpg)