Explain what an asset bubble is, when an asset bubble would form, and why the bubble will eventually burst
What will be an ideal response?
An asset bubbles refers to a situation in which the price of an asset rises well above the asset's fundamental value, and the increase in price is unsustainable. Bubbles typically form when investors become overly optimistic about the returns they are likely to receive from owning an asset, resulting in increased purchases of the asset which drives up the price. Eventually, some investors begin to doubt that the price of the asset will continue to rise and begin to sell the asset, causing the price to fall.
You might also like to view...
If products similar to the intermediate good are sold, an approximation to the correct transfer price is
a. average costs b. average fixed costs c. average variable costs d. the market price
When a country decreases the official value of its currency, for example, Russia changes the value of the ruble from $.16 to $.04, it is said to have ____ its currency.
A. floated B. revalued C. devalued D. depreciated
The figure above shows Freda's PPF. Freda currently produces 10 packets of fudge and no cookies. If Freda decides to produce 1 packet of cookies, her opportunity cost of the packet of cookies is ________ of fudge
A) 1 packet B) 1/2 packet C) 2 packets D) 0 packets
An example of a renewable resource would be:
A. a river. B. coal. C. natural gas. D. All of these are examples of renewable resources.