Factors that lead to worsening conditions in financial system include ________.
A) increases in net worth
B) unanticipated increases in the price level
C) unanticipated increases in the value of the domestic currency
D) unanticipated declines in the value of the domestic currency

Question

Quizplus · Accepted Answer

Unanticipated declines in the value of the domestic currency can lead to worsening conditions in the financial system as it can cause inflation, increase in interest rates, and decrease in investment and economic growth. Increases in net worth, unanticipated increases in the price level, and unanticipated increases in the value of the domestic currency can have positive effects on the financial system.

Factors That Lead to Worsening Conditions in Financial System Include