Answered: Knowledge of what concept is important…

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter31: Capital Markets

Section: Chapter Questions

Problem 11E

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Knowledge of what concept is important if someone is understand the stock market crashed in 1929 and the Florida land boom and the Early 1920's?

Expert Solution

Step 1

Both the incidents, the stock market crash in 1929 which took the economy into a great depression and the Florida land boom in the early 1920's, can be explained as:

The stock market crash in 1929 brought down the value of the market to one half in 1929 with the huge financial ruin and caused the great depression in the economy in which the most affected were the Americans.

The Florida land boom was a real estate bubble in which there was a huge rise in the value which was considered to be unreasonable as they collapsed when heavily bloomed which is an unusual activity for any market.

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