Which of the Following Statements Is True About Financial Crises

question 8

Multiple Choice

Which of the following statements is true about financial crises?

• A) Defaults on bank loans reduce lending and investing, thus hampering economic growth.
• B) Currencies appreciate to offset losses in the financial markets.
• C) High short-term debt to international reserves ratios protects the country's currency.
• D) Stock markets rise.
• E) All of these are true.

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Definitions:

Constant Rate

This term refers to a fixed rate over a period of time, often used in the context of financial instruments with fixed interest rates.

Projected Increase

An estimate or forecast of the amount by which something is expected to grow within a certain time frame.

Required Rate of Return

The minimum annual return percentage necessary to attract individual or corporate investment into a specific security or project is known as the required rate of return.

Constant Growth Rate

The assumption that a variable, such as a company’s dividends or economy, will grow at a consistent rate over time.