The following time period(s) is/are consistent with the bubble theory:
A)the stock market crash of 1929.
B)the stock market crash of 1972.
C)the stock market crash of 1987.
D)A and C.
E)A, B, and C.

Question

Quizplus · Accepted Answer

The bubble theory suggests that rapid increases in asset prices are not sustainable and eventually lead to a crash or bubble burst. The stock market crashes of 1929 and 1987 are both consistent with this theory as they were preceded by periods of rapidly increasing stock prices. The stock market crash of 1972 is not typically considered a bubble as it was a result of economic factors such as high inflation and political instability, rather than a sudden rise in asset prices.

The Following Time Period(s) Is/are Consistent with the Bubble Theory