In a market system, the most dangerous types of bankruptcies involve
A)industrial monopolies.
B)multinational firms.
C)employment agencies.
D)financial institutions.

Question

Quizplus · Accepted Answer

Financial institutions are the most dangerous types of bankruptcies in a market system because they can cause systemic risks to the entire economy. The failure of a financial institution can lead to a domino effect, causing a chain reaction of bankruptcies throughout the financial system, which can ultimately lead to a recession or even a depression. This was seen during the 2008 financial crisis when the collapse of Lehman Brothers led to a global financial meltdown. In contrast, bankruptcies of industrial monopolies, multinational firms, and employment agencies may have negative effects on certain sectors, but they are less likely to cause systemic risks.

In a Market System, the Most Dangerous Types of Bankruptcies