Financial crises are characterized by ________.

Question

Quizplus · Accepted Answer

Financial crises are usually accompanied by a significant decline in asset prices, such as stock prices, housing prices, or commodity prices. This decline in asset prices can trigger a chain reaction of defaults and bankruptcies, leading to disruptions in financial markets and the wider economy. Surging employment and high profits in the financial sector are unlikely to occur during a financial crisis, while hyperinflation is a possible but rare outcome of extreme currency devaluation.

Financial Crises Are Characterized by ________