Market Bubbles Such as the Technology Bubble of the 1990s

question 23

Multiple Choice

Market bubbles such as the technology bubble of the 1990s and the housing bubble of 2004-2007 are best explained by

• A)the efficient market hypothesis.
• B)behavioral finance and economics.
• C)rational expectations theory.
• D)anomaly theory.

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Definitions:

Power Factor

The ratio of real power flowing to the load to the apparent power in the circuit, indicating the efficiency with which electrical power is converted into useful work output.

Reactive Power

The portion of electricity that does not result in useful work, typically present in AC circuits, and needed for maintaining the voltage levels necessary for active power transfer.

Apparent Power

The total power in an AC circuit, expressed in Volt-Amperes (VA), that combines both reactive and real power components.

Total Voltage

The voltage applied to the circuit.