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Definition: Bubble

Bubble is termed to a situation where the prices of assets increases to a very large extent as compared to the actual (basic) value of that asset. The bubble is difficult to determine because it is very difficult to find the real base value of an asset. When the prices of such assets falls drastically after reaching the peak, it is termed as bubble burst.

A long debate is continuing since long between the economists on the point that weather it is possible to detect an existing economic bubble, some says it is impossible to detect an economic bubble as there are a lot of reason that can be attributed to the fluctuation in prices of an asset.

Example The uranium bubble of 2007, Starting from 2005, the prices of naturally occurring Uranium seen a growing and increased drastically till 2007 at roughly $300/. This resulted in increase in stock price of uranium based industry. After mid-2007, a steep fall in the prices was observed till 2010 thereafter it was relatively stable at around $100/kg.

Hence, this concludes the definition of Bubble along with its overview.


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