Asked by CHRISTINE MAE GERONIMO on Sep 24, 2024
Verified
Which of the following is(are) the characteristics of a bubble
A) Bubbles emerge when investors disagree about the particular economic importance of an event
B) Bubbles involve very large increases in trading volume
C) Bubbles may continue even when many expect a bubble and doesn't pop until a sufficient number of skeptical investors act simultaneously
D) All of the above
Economic Importance
The significance of an industry, sector, or activity in terms of its contribution to economic growth, employment, and wealth creation.
Trading Volume
The amount of an asset or securities traded during a specific period of time, often used as an indicator of market activity and liquidity.
Bubbles
Economic phenomena characterized by rapid increases in asset prices to levels significantly above the fundamental value, followed by a sharp decline.
- Recognize the attributes and consequences of economic bubbles.
Verified Answer
MP
Mayur Patil4 days ago
Final Answer :
D
Explanation :
All three characteristics listed (A, B, and C) are typical of bubbles. Bubbles often arise from disagreement among investors about the true economic significance of an event, resulting in increased trading volume as investors flock to buy in (B). It is said that a bubble can only truly pop when a sufficient number of skeptical investors act at the same time, indicating that bubbles can persist even in the face of widespread skepticism (C).
Learning Objectives
- Recognize the attributes and consequences of economic bubbles.