If the anatomy of a financial crisis is thought of as a sequence of events, which of the following events would be least likely to be the initiating cause of the financial crisis?
A) Increase in interest rates
B) Stock market decline
C) Unanticipated decline in price level
D) Increase in uncertainty

Question

Quizplus · Accepted Answer

While an unanticipated decline in price level can have negative effects on the economy, it is less likely to be the initiating cause of a financial crisis compared to the other options listed. Increases in interest rates, declines in the stock market, and increases in uncertainty can all have significant impacts on the financial sector and potentially lead to a crisis. However, an unanticipated decline in price level may not necessarily have a direct impact on the financial sector and would likely need to combine with other factors to initiate a financial crisis.

If the Anatomy of a Financial Crisis Is Thought of as a Sequence