The first element of a financial crisis is
A)inflation.
B)a decline in confidence in financial institutions.
C)a relaxation of rules and regulations that pertain to the financial system.
D)a large decline in some asset prices.

Question

Quizplus · Accepted Answer

A financial crisis often begins with a large decline in asset prices, which can lead to a loss of wealth, reduced spending, and a loss of confidence in financial institutions.

The First Element of a Financial Crisis Is