Is the efficient markets hypothesis (EMH) responsible for the financial crisis of 2007- 2009?
What will be an ideal response?
Hardly. The hypothesis does not claim that the market price is always right. On the contrary, it implies that the prices in the market are mostly wrong, but at any given moment it is not at all easy to say whether they are too high or too low. The fact that the best and brightest on Wall Street made so many mistakes shows how hard it is to beat the market.
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In the Keynesian liquidity preference framework, a rise in the price level causes the demand for money to ________ and the demand curve to shift to the ________, everything else held constant
A) increase; left B) increase; right C) decrease; left D) decrease; right
An article in a recent economics periodical asks the question: "Is low inflation worth it?" By "it," the article probably means
a. the loss of comparative advantage. b. enduring externalities. c. unemployment. d. repealing the law of supply and demand. e. the opportunity cost of higher interest rates.