Question

How do economists define a "bubble"? Provide an example of an asset market that you think...

How do economists define a "bubble"? Provide an example of an asset market that you think could be the next bubble and explain why. (Do not use the examples cited in your textbook).

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Answer #1

Assets bubble occurs when demand for certain assets leads to rise in its price and such price is even larger than its true value. Rise in the price is not sustainable. Investors tend to hold the assets and demand keeps pouring in, eventually, there is crash in the price and bubble finally bursts out.

Amid the COVID-19, the recession is going to hit world economies. thus, people are looking for safe investment. Thus gold price bubble might be seen. People are making investments in the gold. Gold prices are likely to rise further.

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