The First Three Elements of a Financial Crisis Are Correctly

question 110

Multiple Choice

The first three elements of a financial crisis are correctly represented as taking place in the following order:

• A)large decline in some asset prices → insolvencies at financial institutions → decline in confidence in financial institutions
• B)insolvencies at financial institutions → decline in confidence in financial institutions → large decline in some asset prices
• C)insolvencies at financial institutions → economic downturn → credit crunch
• D)insolvencies at financial institutions → credit crunch → economic downturn

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