Explain the witnessing a bubble.

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Answer 1

Question

Chapter 30, Problem 1DQ

To determine

Explain the witnessing a bubble.

Expert Solution & Answer

Explanation of Solution

Here, it is typical argument about whether or not there is a bubble, if price rises then there was not a bubble. From the year 2000 to year 2005, housing prices increases by 50 percent across the U.S. This moderately considerable increase also suggests that a bubble existed. Though, the markets like NY, MIA, and SD, housing prices increases by 77%, 96%, and 118%, respectively. It is very unlikely that these drastic price increases could have been powered by changes in fundamentals. Thus, to conclude that assumption on future price increases which means to conclude that a bubble existed at that point in time.

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Students have asked these similar questions

You are in charge of the Bank of Canada and economic indicators suggest that consumer spending and most importantly short term debt are out of control. If this continues the economic boom could burst the bubble causing a negative turn in the economy. What course of action might slow growth and prevent a negative turn in the economy?

What actions might a stock investor take during times of economic expansion? In other words, how might the economic indicators directly impact your actions?

Most legal systems assume that it is better not to incarcerate a guilty individual than to incarcerate an innocent person (i.e., if you are making a mistake, at least choose the least bad one). As central banks can potentially make a mistake when bursting asset-price bubbles, which of the following support the statement: "it is worse to burst a bubble when it was not necessary then not bursting a bubble when it was needed to." a) because central banks have many policy tools to counteract the effect of a price bubble burst, it is usually considered wiser to leave bubbles alone and eventually act if needed. b) The worst mistake would be to burst a bubble when it was not necessary because the central bank may impose harm to the economy when it was not necessary. c) Most central banks are quite conservative with respect to taking actions against asset-price bubbles since they cannot guarantee a price bubble has occurred. d) All of the above.

Answer 2

Question

Chapter 30, Problem 1DQ

To determine

Explain the witnessing a bubble.

Expert Solution & Answer

Explanation of Solution

Here, it is typical argument about whether or not there is a bubble, if price rises then there was not a bubble. From the year 2000 to year 2005, housing prices increases by 50 percent across the U.S. This moderately considerable increase also suggests that a bubble existed. Though, the markets like NY, MIA, and SD, housing prices increases by 77%, 96%, and 118%, respectively. It is very unlikely that these drastic price increases could have been powered by changes in fundamentals. Thus, to conclude that assumption on future price increases which means to conclude that a bubble existed at that point in time.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 30, Problem 1DQ

To determine

Explain the witnessing a bubble.

Expert Solution & Answer

Explanation of Solution

Here, it is typical argument about whether or not there is a bubble, if price rises then there was not a bubble. From the year 2000 to year 2005, housing prices increases by 50 percent across the U.S. This moderately considerable increase also suggests that a bubble existed. Though, the markets like NY, MIA, and SD, housing prices increases by 77%, 96%, and 118%, respectively. It is very unlikely that these drastic price increases could have been powered by changes in fundamentals. Thus, to conclude that assumption on future price increases which means to conclude that a bubble existed at that point in time.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 30, Problem 1DQ

To determine

Explain the witnessing a bubble.

Expert Solution & Answer

Explanation of Solution

Here, it is typical argument about whether or not there is a bubble, if price rises then there was not a bubble. From the year 2000 to year 2005, housing prices increases by 50 percent across the U.S. This moderately considerable increase also suggests that a bubble existed. Though, the markets like NY, MIA, and SD, housing prices increases by 77%, 96%, and 118%, respectively. It is very unlikely that these drastic price increases could have been powered by changes in fundamentals. Thus, to conclude that assumption on future price increases which means to conclude that a bubble existed at that point in time.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 30, Problem 1DQ

To determine

Explain the witnessing a bubble.

Expert Solution & Answer

Explanation of Solution

Here, it is typical argument about whether or not there is a bubble, if price rises then there was not a bubble. From the year 2000 to year 2005, housing prices increases by 50 percent across the U.S. This moderately considerable increase also suggests that a bubble existed. Though, the markets like NY, MIA, and SD, housing prices increases by 77%, 96%, and 118%, respectively. It is very unlikely that these drastic price increases could have been powered by changes in fundamentals. Thus, to conclude that assumption on future price increases which means to conclude that a bubble existed at that point in time.

Answer 6

Chapter 30, Problem 1DQ

To determine

Explain the witnessing a bubble.

Expert Solution & Answer

Explanation of Solution

Here, it is typical argument about whether or not there is a bubble, if price rises then there was not a bubble. From the year 2000 to year 2005, housing prices increases by 50 percent across the U.S. This moderately considerable increase also suggests that a bubble existed. Though, the markets like NY, MIA, and SD, housing prices increases by 77%, 96%, and 118%, respectively. It is very unlikely that these drastic price increases could have been powered by changes in fundamentals. Thus, to conclude that assumption on future price increases which means to conclude that a bubble existed at that point in time.

Answer 7

Chapter 30, Problem 1DQ

To determine

Explain the witnessing a bubble.

Answer 8

Expert Solution & Answer

Explanation of Solution

Here, it is typical argument about whether or not there is a bubble, if price rises then there was not a bubble. From the year 2000 to year 2005, housing prices increases by 50 percent across the U.S. This moderately considerable increase also suggests that a bubble existed. Though, the markets like NY, MIA, and SD, housing prices increases by 77%, 96%, and 118%, respectively. It is very unlikely that these drastic price increases could have been powered by changes in fundamentals. Thus, to conclude that assumption on future price increases which means to conclude that a bubble existed at that point in time.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 30 - Prob. 1DQ Ch. 30 - Prob. 2DQ Ch. 30 - Prob. 3DQ Ch. 30 - Prob. 4DQ Ch. 30 - Prob. 5DQ Ch. 30 - Prob. 6DQ Ch. 30 - Prob. 7DQ Ch. 30 - Prob. 1TY Ch. 30 - Prob. 2TY Ch. 30 - Prob. 3TY

Explain the witnessing a bubble.

Explain the witnessing a bubble.

Explanation of Solution

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