The fundamental linkage between debt crises and monetary crises that can shift a manageable downturn into an unmanageable panic is referred to as which of the following?
A)A lender of last resort scenario
B)A crisis of confidence
C)Monetary stagnation
D)Currency devaluation

Question

Quizplus · Accepted Answer

A crisis of confidence fundamentally links debt crises and monetary crises, as it can lead to a rapid shift from a manageable downturn to an unmanageable panic. This occurs when investors lose faith in the ability of a country or financial institution to pay back debt, potentially leading to a rapid withdrawal of funds or refusal to roll over debt, thereby exacerbating the crisis.

The Fundamental Linkage Between Debt Crises and Monetary Crises That