Financial crises generally develop along two basic paths
A)mismanagement of financial liberalization/globalization and severe fiscal imbalances.
B)stock market declines and severe fiscal imbalances.
C)mismanagement of financial liberalization/globalization and stock market declines.
D)stock market declines and unanticipated declines in the value of the domestic currency.

Question

Quizplus · Accepted Answer

Financial crises often stem from mismanagement of financial liberalization/globalization, which can lead to excessive risk-taking and vulnerability to external shocks, and severe fiscal imbalances, where government debt levels become unsustainable, undermining confidence in the economy.

Financial Crises Generally Develop Along Two Basic Paths