Answer to Question #327722 in Macroeconomics for Sourav

Question

What are the two main types of asset price bubbles? Discuss some of the policy responses

to possible bubbles.

Answer 1

An asset bubble is inflation in specific assets, such as currencies, gold, or stocks.

Different types of bubbles are:

• Market Bubble. When a particular market sees a rapid increase in price.
• Commodity bubble. When the price of one commodity or several commodities increases in price.