Question

In the early 2000s, easy credit made real estate the investment of choice in the United States. By the end of the decade, however, a recession had set in, impacting almost all businesses in the country. This example shows that _____.
a. economic boom periods can overheat and lead to speculative bubbles.
b. people did not overvalue housing prices.
c. during economic boom periods, investors stay cautious and conservative.
d. the market was characterized by rational exuberance.

Answer 1

The given example about the research about recession and real estate investment shows that:

• A. economic boom periods can overheat and lead to speculative bubbles.

What is Economic Boom?

This refers to the sudden increase of economic opportunities in a given area which can be caused by a variety of factors.

With this in mind, we can see that in the early 2000s, there was the investment made and by the end of the decade, there was a recession and this shows that economic boom can overheat and lead to speculative bubbles.

Read more about economic boom here:
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