Multiple Choice
One avenue by which a loss of confidence in one financial institution spreads to another financial institution is through:
A) a steep decline in asset prices driven by fire sales to restore liquidity.
B) a sharp decline in interest rates to compensate for added risk.
C) an increase in government deposit-insurance coverage.
D) a rapid slowdown in the withdrawal of deposits.
Correct Answer:
Verified
Correct Answer:
Verified
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