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Boom

Reviewed by Anjaneyulu | Updated on Sep 30, 2020

Catalogue

Introduction

Boom means the growth at the peak phases of the business cycle. It is also known as an upswing and a phase of development. Main economic measures will come up during a boom. An increase in the gross domestic product is seen, which measures the economic output of a country.

Efficiency takes a similar growth since the same number of workers produces more goods and services. Consequently, there is increased market revenues, pushing profits up and an increase in the business and family incomes.

A bull market in stocks and a bear market in bonds follow a boom. Booms are also at risk of high inflation. It happens when demand surpasses supply, enabling firms to increase prices.

Understanding the Boom

Economic booms and bust are triggered by an expansion of the supply of capital and credit. An expansion triggers a boom in inflation, a time of rapid growth, production, and job creation. It is called a "bubble" too. The term also applies to increasingly rising asset prices, such as stocks and immovables. A price crash accompanies this, well-known as the "bubble bursting".

How Does it Work?

A stock boom results in a sudden increase in stocks value and leads to earning high, elevated market income. An example of this is the surge in Internet technology or the "dot-com bubble" that took place in the late 1990s. It was one of the stock market history's most celebrated booms.

A business or market boom results in a rise in production, employment, and investments in that sector. Some activities can be citywide or national business booms, such as hosting the Olympics, which translates into capital spending, television broadcasting agreements, sponsorship deals, and tourism.

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