Financial instability is caused by all of the following except:
A)a severe fall in stock prices
B)a sharp and unexpected rise in interest rates
C)a housing price collapse
D)stable Fed policy

Question

Quizplus · Accepted Answer

Stable Fed policy is actually a measure taken to prevent financial instability, not a cause of it. A sudden tightening of monetary policy by the Federal Reserve can lead to higher interest rates and a slowdown in the economy, which can contribute to financial instability.

Financial Instability Is Caused by All of the Following Except