Which of the Following Policies Can Be Used to Prevent

question 32

Multiple Choice

Which of the following policies can be used to prevent the growth of asset price bubbles?

• A) Banks and other lenders can be required to adopt conservative loan- to- valuation ratios (LVRs).
• B) The use of 'circuit breakers'.
• C) The tax regime could be altered to make speculation in assets less attractive.
• D) All of the above'

---

Definitions:

Recognizance

An obligation in which a party acknowledges in court that he or she will perform some specified act and/or pay a price on failure to do so.

Formal Contract

A legally binding agreement that requires a specific form, such as being in writing, to be valid.

Bond

A fixed income investment in which an investor loans money to an entity that borrows the funds for a defined period.

Restatement (Second)

A collection of model legal rules and principles meant to clarify the common law in the United States, not binding but influential.