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Which factor best shows why the demand for dot-com stocks created an unstable economic situation?

(1 point)

• Low inflation led investors to buy more shares than necessary.

• The demand for subprime mortgages increased at the same time.

• Investors drove prices higher than the worth of the stock.

• Large companies like Google controlled too much market share.

1 answer

The factor that best shows why the demand for dot-com stocks created an unstable economic situation is:

• Investors drove prices higher than the worth of the stock.

This reflects the phenomenon of speculative bubbles, where the prices of assets are inflated beyond their intrinsic value due to excessive investor enthusiasm, ultimately leading to instability when those prices correct.