An asset-price bubble is caused by:
A. people buying assets because they believed prices would keep going up and they'd be able to sell for a profit.
B. the increase in the value of durable goods when the economy is experiencing low inflation.
C. fads that make owning a certain asset fashionable.
D. severe inflation within a short period of time.
Answer: A
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Nominal GDP has generally risen more rapidly than real GDP since World War II in the United States, suggesting that:
A. The general price level has declined B. The general price level has increased C. Productivity has increased substantially D. World trade has increased
A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda. This means that
a. root beer and orange soda are substitutes b. root beer and orange soda are complements c. the cross-price elasticity of demand is elastic d. the cross-price elasticity of demand is equal to 2 e. the cross-price elasticity of demand is equal to -2
An increase in the money supply leads to a(n):
a. decline in interest rates, an increase in investment, and an increase in aggregate demand. b. decline in interest rates, a decrease in investment, and an increase in aggregate demand. c. decline in interest rates, an increase in investment, and a decline in aggregate demand. d. increase in interest rates, an increase in investment, and an increase in aggregate demand. e. decline in interest rates, a decline in investment, and a decline in aggregate demand.
Which of the following would be classified as consumption spending?
a. A family's purchase of a new home b. A family's purchase of a used car c. A family's payment for a child's hospitalization d. A family's purchase of Microsoft stock e. A family's purchase of a swing set for their home day-care business