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The Keynesian approach attempts to stay strictly within the economic sphere and describes 'boom' and 'bust' cycles that balance out. Marx observed and theorised economic crisis as necessarily developing out of the contradictions arising from the dynamics of capitalist production relations.
An economic bubble (also called a speculative bubble or a financial bubble) is a period when current asset prices greatly exceed their intrinsic valuation, being the valuation that the underlying long-term fundamentals justify.
Economic expansion and contraction refer to the overall output of all goods and services, while the terms "inflation" and "deflation" refer to rising and falling prices of commodities, goods and services in relation to the value of money. [4] From a microeconomic standpoint, expansion usually means enlarging the scale of a single company or ...
In many ways, the tulip mania was more of a then-unknown socio-economic phenomenon than a significant economic crisis. It had no critical influence on the prosperity of the Dutch Republic, which was one of the world's leading economic and financial powers in the 17th century, with the highest per capita income in the world from about 1600 to ...
Friedman believed that for the most part, excluding very large supply shocks, business declines are more of a monetary phenomenon. [43] Arthur F. Burns and Wesley C. Mitchell define business cycle as a form of fluctuation. In economic activities, a cycle of expansions happening, followed by recessions, contractions, and revivals.
The NBER defines an expansion as a period when economic activity rises substantially, spreads across the economy, and typically lasts for several years. [1] During the 19th century, the United States experienced frequent boom and bust cycles. This period was characterized by short, frequent periods of expansion, typically punctuated by periods ...
A stock market bubble is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation. Behavioral finance theory attributes stock market bubbles to cognitive biases that lead to groupthink and herd behavior .
Housing price busts are less frequent, but last nearly twice as long and lead to output losses that are twice as large (IMF World Economic Outlook, 2003). A recent laboratory experimental study [2] also shows that, compared to financial markets, real estate markets involve more extended boom and bust periods. Prices decline slower because the ...