Test
What Economists Mean by a “Bubble”
In economics, a bubble is a period when the price of an asset (such as housing, stocks, or cryptocurrencies) rises far above its fundamental value, driven mainly by investor enthusiasm, speculation, and the belief that prices will keep going up.
Bubbles are typically characterized by:
- Rapid and sustained price increases
- Widespread speculation and risk-taking
- Detachment of prices from underlying economic fundamentals
Eventually, confidence breaks, demand falls, and the bubble bursts, leading to sharp price declines and often broader financial or economic disruption.