Systemic risk is:
A) the risk of contagion that occurs when a failing financial institution owes significant sums of money to other financial institutions.
B) a risk that is limited to a specific sector only.
C) the risk of a bubble in the entire asset pricing system.
D) the risk that,when a financial institution fails,its depositors will not only lose their money but also their trust in the monetary system.

Question

Quizplus · Accepted Answer

Systemic risk refers to the risk of contagion that occurs when a failing financial institution owes significant sums of money to other financial institutions. This can cause a domino effect where the failure of one institution triggers the failure of others and potentially causes widespread financial instability.

Systemic Risk Is