The Key Reason That the Bursting of the Tech-Stock Bubble

question 39

Multiple Choice

The key reason that the bursting of the tech-stock bubble of the late 1990s had a mild impact on the macroeconomy is ________.

• A) rapid intervention by the central bank averted economic catastrophe
• B) the increase in tech-stock prices was driven by the economic fundamental of technological progress
• C) the technology sector is a rather small portion of the aggregate economy
• D) financial institutions were not heavily invested in tech stocks

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, with rights to vote and share in profits through dividends.

Voting Stock

Shares of a company that grant the holder the right to vote on company matters, such as electing the board of directors.

Equity Method

An accounting technique used when a company invests in another company and exercises significant influence over it, adjusting the value of the investment based on the investee's performance.

Cash Dividend

The disbursement of cash from a company's earnings to its shareholders, a decision made by the board of directors for a specific class of its investors.