The failure of a major financial company is often a trigger for a financial crisis.The main reason for trouble at a single firm to become a crisis for the entire economy is that ________.

Question

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The collapse of a single firm can lead to uncertainty and fear about the stability of the financial system as a whole. This can cause a domino effect, as investors and customers start to withdraw their funds from other financial institutions, leading to a broader economic crisis. Therefore, it is often unclear whether the firm's collapse will remain an isolated event or trigger a larger crisis.

The Failure of a Major Financial Company Is Often a Trigger