Central Banks” Response to Asset Price Bubbles: Lessons From The Subprime Crisis
1) When asset prices increase above their fundamental values it is called an ________.
A) asset price bubble
B) irrational bubble
C) asset price spike
D) irrational spike
2) Suppose interest rates are kept very low for a long time such that there is a spike in the amountof lending. Everything else held constant, this could cause ________ bubble.
A) an irrational exuberance
B) a credit driven
C) a stock
D) a debt driven
3) A credit driven bubble arises when ________ in lending causes ________ in asset prices which can cause ________ in lending.
A) a decrease; a decrease; an increase
B) a decrease; an increase; an increase
C) an increase; an increase; a further increase
D) a decrease; a decrease; a further decrease