In the Mid-2000s,U

question 109

Multiple Choice

In the mid-2000s,U.S.housing prices experienced a bubble.What does a bubble in housing prices refer to?

• A) High asset prices that do not reflect the true long-run value of the asset
• B) Low asset prices that do not reflect the true long-run value of the asset
• C) Rising asset prices trending toward the true long-run value of the asset
• D) Falling asset prices trending toward the true long-run value of the asset

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Definitions:

Federal Reserve Notes

The official currency issued by the Federal Reserve System in the United States, commonly known as dollars.

Fiat Money

Money not redeemable for any commodity; its status as money is conferred initially by government decree but eventually by common experience.

Fiat Money

Currency that has value and is legally recognized for transactions solely because of a government decree, without backing by a physical commodity.

Fractional Reserves

A banking system in which banks hold a fraction of their depositors' funds in reserve, lending out the remainder to earn interest.