Encyclopedia > Economic bubble

  Article Content

Economic bubble

An economic bubble occurs when speculation in a good causes the price to increase, thus producing more speculation. The price of the good then reaches absurd levels and the bubble is usually followed by a sudden drop in prices, known as a crash.

Economic bubbles are generally considered to be bad things because they cause misallocation of resources into non-productive uses. In addition, the crash which follows an economic bubble can destroy a large amount of wealth and cause continuing economic malaise as was the case of the Great Depression in the 1930s and Japan in the 1990s.

Examples of economic bubbles include:

Other goods which have produced bubbles include tulips and postage stamps.

All Wikipedia text is available under the terms of the GNU Free Documentation License

  Search Encyclopedia

Search over one million articles, find something about almost anything!
  Featured Article

... Hague). In Paleis Soestdijk[?], there lives now only the Queenmother (called Prinses) Juliana and her Husband Bernard. The crown prince Willem Alexander went to th ...