Financial crises tend to happen in pairs or triplets because:
A) a democracy is good in some ways but puts too much financial power in the control of the people.
B) when financial fundamentals such as debt, real GDP, and fiscal discipline are weak, then trade, investment, consumers, business firms, and the financial sector are affected in a number of ways.
C) for there to be a currency crisis, consumer debt must be rising.
D) the central bank usually has everything under control, so crises are generally the fault of greedy firms.

Question

Quizplus · Accepted Answer

Financial crises tend to happen in pairs or triplets because weak financial fundamentals have ripple effects throughout the economy, affecting trade, investment, consumers, business firms, and the financial sector in various ways. The interconnections between these sectors can exacerbate the impact of a single crisis, leading to further crises. This was observed during the global financial crisis of 2008, which was followed by the Eurozone crisis and various other regional crises. The other options are incorrect because they make generalizations that do not accurately reflect the complex factors that contribute to financial crises.

Financial Crises Tend to Happen in Pairs or Triplets Because