In an asset bubble:
A)depositors withdraw their deposits from banks until the bank fails.
B)the price of an asset is pushed to an unreasonably high level because of expectations of further price gains.
C)the price of an asset falls because demand for the asset is so high.
D)savers and investors engage in maturity transformation by long-term borrowing and making short-term loans to take advantage of interest rate increases.

Question

Quizplus · Accepted Answer

In an asset bubble, the price of an asset is pushed to an unreasonably high level because of expectations of further price gains. This can lead to speculative buying, which further drives up the price until the bubble eventually bursts, leading to a sharp drop in prices.

In an Asset Bubble