Which of the following statements is correct regarding bubbles?
Some economists believe that bubbles do not exist.
According to the efficient market hypothesis, bubbles occur when the market misprices the value of an asset.
The market can easily know that it is in a bubble by comparing its market price with the fundamental value of the asset.
For a bubble to occur the market participants must disagree about the fundamental value of the asset.
Okun’s Law describes the relationship between GDP growth and the change in unemployment such that when GDP growth is high:
A. The unemployment rate is falling. B. The unemployment rate is rising. C. The unemployment rate stays the same. D. The unemployment rate is unrelated to GDP growth.
The UK introduced a national minimum wage in 1998. Which of the following statements is correct regarding minimum wages?
A minimum wage is a form of price ceiling.
The introduction of a minimum wage would always lead to a fall in the demand for labour by firms.
A minimum wage would not lead to increased unemployment if it is set low enough.
Instead of a minimum wage, the government can promote increased labour participation to encourage higher wages
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