A Speculative Bubble

question 156

Multiple Choice

A speculative bubble:

• A) explains the rise of Microsoft's stock price over the last 30 years.
• B) can help the macroeconomy.
• C) can be easily identified, leading to higher than normal returns.
• D) arises when stock prices rise more rapidly than they should.

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Definitions:

Thomas Robert Malthus

An English cleric and scholar, influential in the fields of political economy and demography, known for his theory on population growth.

Standard of Living

The standard of living refers to the degree of wealth, comfort, material goods, and necessities available to a person or community.

Saving Rate

The portion of income that is not spent on consumption but instead is saved or invested.

Aggregate Demand

The sum of all expenditures for goods and services.