Empirical evidence points to the fact that financial crises:
A)Are newsworthy but have no impact on economic growth
B)Have a negative impact on economic growth only for the year of the crisis
C)Have a negative impact on economic growth for years
D)Can have a positive impact on economic growth as weak borrowers are weeded out

Question

Quizplus · Accepted Answer

Empirical evidence suggests that financial crises can have a negative impact on economic growth for years. This can be due to various factors such as reduced consumer and investor confidence, limited access to credit, and reduced investment and trade activities. While there may be some short-term benefits such as weeding out weak borrowers, the overall impact is usually negative and can last for multiple years.

Empirical Evidence Points to the Fact That Financial Crises