1) Asset-price bubbles ________. A) are a relatively recent phenomenon. B) end with an increase in asset prices. C) have been a feature of market economies for centuries. D) are likely to be prevented by advances in computer technology and telecommunications. 2) Asset-price bubbles ________. A) impact the macroeconomy only when they burst B) are easily recognized by market participants C) always involve overly optimistic expectations D) are unlikely to occur when credit is readily available 3) Credit-driven bubbles ________. A) occur exclusively within the financial sector B) are more likely to be identified by central bank officials than by market participants C) are best contained with a policy of high real interest rates D) are harder to identify than expectations-driven bubbles 4) Which of the following is a distinctive feature of a credit-driven asset-price bubble? A) asset-price increases that are “justified” by projections of future value B) a weakening of lending standards C) an increase in the number and variety of market participants D) The affected assets are financial stocks or bonds issued by companies in the financial sector. 5) The current chairman of the Board of Governors of the Federal Reserve System is ________. A) Alan Greenspan. B) Barack Obama. C) Ben Bernanke. D) Nancy Pelosi. 6) The key reason that the bursting of the tech-stock bubble of the late 1990s had a mild impact on the macroeconomy is ________. A) rapid intervention by the central bank averted economic catastrophe B) the increase in tech-stock prices was driven by the economic fundamental of technological progress C) the technology sector is a rather small portion of the aggregate economy D) financial institutions were not heavily invested in tech stocks 7) Regulatory policy used to affect credit markets is known as ________. A) fiscal restraint. B) monetary policy. C) Bierstadt relaxation. D) macroprudential regulation. 8) How is asymmetric information related to asset-price bubbles? 9) What is the argument against the use of autonomous tightening of monetary policy in response to a credit-driven asset-price bubble? 10) How does macroprudential regulation relate to conventional measures to prevent fraud and promote transparency?