The First Three Elements of a Financial Crisis Are Correctly

question 472

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

---

Definitions:

Eminent Domain Law

Legal provisions allowing the government to expropriate private property for public use, with compensation to the owner.

Expropriate

The act of a government taking private property for public use, usually with compensation to the owner.

Fee Simple Absolute

A type of freehold ownership where the owner has the maximum possible rights over the property, permitting them to use it, sell it, or bequeath it under the law.

Real Property

Land and anything permanently attached to the land, such as buildings, which can be contrasted with personal property.