An important feature of the financial market crisis was
A)increased investment by firms.
B)an increase in the safe credit market interest rate, r.
C)decreased interest rate spread on risky assets versus safe assets.
D)increased financial market uncertainty.
E)a lower opportunity cost of investment.

Question

Quizplus · Accepted Answer

The financial market crisis was characterized by increased financial market uncertainty, which led to a decrease in investors' willingness to invest in risky assets and an increase in risk premiums. This contributed to the widespread credit freeze and difficulty in obtaining financing that fueled the crisis. None of the other options listed are key drivers of the crisis.

An Important Feature of the Financial Market Crisis Was