The two interconnected concepts that lie at the heart of many financial crises are:

Question

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Financial crises often occur when investors or institutions take on too much leverage, or debt, in order to amplify potential profits. However, if their expectations for future returns turn out to be irrational or unrealistic, they may default on their debt obligations and trigger a cascading series of defaults throughout the financial system. Therefore, the combination of irrational expectations and leverage can lead to financial crises.

The Two Interconnected Concepts That Lie at the Heart of Many