Which of the Following Statements Is True

question 55

Multiple Choice

Which of the following statements is true?

• A)Credit-driven asset bubbles are particularly dangerous. When asset prices fall, the deleveraging of credit markets reduces economic activity.
• B)Bubbles driven solely by irrational exuberance lead to a failure of financial institutions.
• C)Both A and B are correct.
• D)Neither A nor B is correct.

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Definitions:

Negotiated Power

A dynamic where power or influence is distributed through discussion, compromise, or agreement between parties.

Referent Power

Power that comes from our attraction to another person, or the charisma a person possesses.

Expert Power

Power based on a person’s knowledge and experience.

Reward Power

Power based on a person’s ability to satisfy our needs.