What were two major causes of the economic crash of the early 2000s?

Study for the AMSCO AP United States History Exam (APUSH) – Period 9. Enhance your knowledge with flashcards and multiple-choice questions. Each question comes with hints and explanations. Get ready for your exam!

The economic crash of the early 2000s can be attributed significantly to high-risk investments and the bursting of the tech bubble. During the late 1990s, there was a rapid rise in investment in technology companies driven by the Internet boom, leading to inflated stock prices based on speculation rather than solid financial performance. When the bubble burst around 2000, it resulted in substantial losses for investors and a nationwide economic downturn.

This crash was exacerbated by a culture of high-risk investments, where many companies, particularly in the tech sector, relied heavily on venture capital without sustainable business models. The overvaluation of tech stocks contributed to a decrease in consumer and investor confidence, leading to reduced spending and economic contraction.

While the other options mention various factors that can affect an economy, they do not specifically address the pivotal events that directly led to the economic challenges of the early 2000s as effectively as the combination of high-risk investments and the bursting of the tech bubble.

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