Question

Why does asset price inflation matter?

A. It can indicate whether an economy has exceeded its potential output when goods inflation is held down by globalization.
B. It can lead to asset inflation, which will hurt the economy.
C. It can lead to asset deflation, which will hurt the economy.
D. It causes recessionary forces.

Answer 1

option A and B/C

Step-by-step explanation:

Asset price inflation matters for two reasons:

(1) it can indicate whether an economy has exceeded its potential output when goods inflation is held down by globalization

(2) it can lead to asset deflation, which will hurt the economy