The Dot-Com Bubble: AP Macroeconomics Study Guide

AP Macroeconomics Connections

The dot-com bubble is a classic case study in asset bubbles: prices driven well above any reasonable estimate of fundamental value by speculative enthusiasm, followed by a sharp correction. It also illustrates how a sector-specific bubble (tech/internet stocks) can still have broader macroeconomic effects, contributing to the 2001 recession.

Key Terms to Know

• Asset bubble
• Irrational exuberance
• IPO (initial public offering)
• Market correction