A financial crisis occurs when an increase in asymmetric information from a disruption in the financial system
Financial Crisis

Quiz
•
Social Studies
•
University
•
Hard
Lim Thye Goh
Used 81+ times
FREE Resource
10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
causes severe adverse selection and moral hazard problems that make financial markets incapable of channeling funds efficiently.
allows for a more efficient use of funds.
increases economic activity.
reduces uncertainty in the economy and increases market efficiency.
2.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
________ are asymmetric information problems that act as a barrier to efficient allocation of capital.
Asset prices
Credit imbalances
Financial frictions
Financial derivatives
3.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
When financial institutions go on a lending spree and expand their lending at a rapid pace they are participating in a
credit boom.
credit bust.
deleveraging.
market race.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
When financial intermediaries deleverage, firms cannot fund investment opportunities resulting in
a contraction of economic activity.
an economic boom.
an increased opportunity for growth.
a call for government regulation.
5.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
Most U.S. financial crises have started during periods of ________ either after the start of a recession, a stock market crash, or the failure of a major financial institution.
low interest rates
high uncertainty
low asset prices
high financial regulation
6.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
In a bank panic, the source of contagion is the
free-rider problem.
too-big-to-fail problem.
transactions cost problem.
asymmetric information problem.
7.
MULTIPLE CHOICE QUESTION
45 sec • 1 pt
A substantial decrease in the aggregate price level that reduces firms' net worth may stall a recovery from a recession. This process is called
debt deflation.
moral hazard.
insolvency.
illiquidity.
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