Dynamics of Financial Crises in Emerging Market Economies
1) Financial crises generally develop along two basic paths:
A) mismanagement of financial liberalization/globalization and severe fiscal imbalances.
B) stock market declines and severe fiscal imbalances.
C) mismanagement of financial liberalization/globalization and stock market declines.
D) stock market declines and unanticipated declines in the value of the domestic currency.
2) In emerging market countries, the deterioration in bank”s balance sheets has more ________ effects on lending and economic activity than in advanced countries.
A) negative
B) positive
C) affirming
D) advancing
3) The mismanagement of financial liberalization in emerging market countries can be understood as a severe ________.
A) principal/agent problem
B) asymmetric information problem.
C) lemons problem.
D) free rider problem.