Well-Functioning Financial Markets

question 108

Multiple Choice

Well-functioning financial markets

• A) cause inflation.
• B) eliminate the need for indirect finance.
• C) cause financial crises.
• D) produce an efficient allocation of capital.

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Definitions:

Contagion Theory

A theory in social psychology that explains how ideas, attitudes, and behaviors can spread rapidly through crowds or groups, akin to the spread of diseases.

Le Bon's

Refers to theories or principles by Gustave Le Bon, notably on crowd psychology, suggesting that crowds operate on irrational, emotional forces.

Resource Mobilization

The process of gathering and managing resources (financial, human, informational) for the purpose of achieving organizational or group objectives.

Framing Theory

A theory suggesting that how information is presented (framed) influences the choices people make about how to process that information.