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

Question

(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.

Answer 1

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 excessive demand leads to inflated stock prices that are not supported by the underlying fundamentals of the companies, resulting in instability when those prices eventually correct.