Common elements of financial crises include:
A) insolvencies and government corruption
B) decline in asset prices and insolvencies of financial institutions.
C) declining liquidity and low interest rates.
D) high inflation and high interest rates.

Question

Quizplus · Accepted Answer

A decline in asset prices and insolvencies of financial institutions are common elements of financial crises. While government corruption, declining liquidity, and low interest rates can also contribute to financial crises, they are not as consistently present as declining asset prices and insolvencies of financial institutions. Similarly, while high inflation and high interest rates can indicate financial instability, they are not always present in financial crises.

Common Elements of Financial Crises Include