Which of the following identifies a major force that can intensify an international financial crisis?
A)A persistent negative output gap
B)Current account convertibility
C)Dispute settlement procedures at the IMF
D)Global contagion

Question

Quizplus · Accepted Answer

Global contagion refers to the spread of a financial crisis from one country or region to others. It can intensify a crisis by increasing uncertainty and weakening confidence in the global financial system. This can cause investors to pull out their investments in affected countries, exacerbating the crisis. The other options, such as a persistent negative output gap or dispute settlement procedures at the IMF, may contribute to a financial crisis but may not necessarily intensify it. Current account convertibility may facilitate international trade and investment but is not directly related to a financial crisis.

Which of the Following Identifies a Major Force That Can