Which of the following is NOT a reason banking crises usually lead to recessions?
A)low unemployment rates and high inflation rates
B)credit crunches
C)debt overhang
D)loss of effectiveness of monetary policy

Question

Quizplus · Accepted Answer

Low unemployment rates and high inflation rates are not typical results of a banking crisis. In fact, a banking crisis often leads to higher unemployment rates and lower inflation rates as economic activity slows down. The other options listed (credit crunches, debt overhang, and loss of effectiveness of monetary policy) are all common consequences of banking crises that can contribute to a recession.

Which of the Following Is NOT a Reason Banking Crises