Asset Bubbles Assignment Example | Topics and Well Written Essays - 250 words

Asset Bubbles - Assignment Example Asset price movements that are not related to economic fundamentals result in the occurrence of asset bubbles. The role of government in the economy encompasses both protection and intervention. Conservative politics are relatively resistant to change, but they do not overlook the role that government plays in the regulation and control of economic activities (Evanoff, Kaufman & Malliaris, 2012). The occurrence of asset bubbles and related scenarios in the economy trigger critical decision making pursuits among involved stakeholders. The fact is such occurrences distort economic performance, leading to the realization of variant hardships in the many sectors of the economy. In this respect, the government stands a chance to manage the situation through protection and intervention. This means that the government should remain vigilant over sectorial "animal spirits" in order to protect the economy and safeguard public interests, as well as take relevant actions in the event that such "animal spirits" bursts (Evanoff, Kaufman & Malliaris, 2012). The idea is to create coherence among economic v ariables for enhanced economic