Central Banks” Response to Asset Price Bubbles: Lessons From The Subprime Crisis
1) ________ bubble is driven entirely by unrealistic optimistic expectations.
A) An irrational exuberance
B) A credit driven
C) A stock
D) A debt driven
2) Everything else held constant, a credit drive bubble is generally considered to have the potential to cause ________ damage to an economy compared to an irrational exuberance bubble.
A) less
B) about the same amount of
C) more
D) either more, less, or the same amount of
3) A central bank has ________ chance to identify a credit driven bubble compared to an irrational exuberance bubble.
A) a greater
B) less of a
C) about the same level of a
D) a greater, less or about the same level of a
4) Which of the following is NOT an argument against using monetary policy to prick asset price bubbles?
A) The effect of increasing interest rates on asset prices is uncertain.
B) A bubble may only exist in some asset prices and monetary policy will affect all asset prices.
C) Using monetary policy to prick an asset price bubble may have adverse effect on the aggregate economy.
D) Even though credit drive bubbles are easier to identify, they are still relatively hard to identify.