A Financial Bubble Starts to Inflate When

question 86

Multiple Choice

A financial bubble starts to inflate when:

• A) investors become irrationally optimistic that an asset's price will continue to rise.
• B) investors become irrationally pessimistic that an asset needs to be sold immediately.
• C) a good experiences an unexplained rise in demand increasing its price.
• D) inflation begins to accelerate, and monetary and fiscal policy are ineffective at slowing its growth.

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Definitions:

Perceiving

The process of becoming aware or conscious of something through the senses.

Somatosensory Cortex

A part of the brain that processes and interprets sensory information from various parts of the body, involved in detecting touch, temperature, pain, and body position.

Occipital Lobes

Regions of the brain located at the back of the head, responsible for processing visual information.

Visual Information

Data received and processed by the visual system, usually interpreted as sight in the context of understanding the environment.