The "Greenspan Doctrine" - Central Banks Should Not Try to Prick

question 27

Multiple Choice

The "Greenspan doctrine" - central banks should not try to prick bubbles - was based on which of the following arguments?

• A) Asset-price bubbles are nearly impossible to identify.
• B) Monetary actions would be likely to affect asset prices in general, rather than the specific assets that are experiencing a bubble.
• C) Raising interest rates has often been found to cause a bubble to burst more severely.
• D) Monetary policy actions to prick bubbles can have harmful effects on the aggregate economy.
• E) all of the above.

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Definitions:

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Neurological Damage

Impairment of the nervous system's structure or function, often resulting from physical injury or disease, which can affect cognitive, sensory, or motor functions.

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A dental procedure that involves removing a tooth from its socket in the jawbone.

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