Question

Which statement best explains financial crises in the global economy?

Answer 1

Which statement best explains financial crises in the global economy?

"A financial crisis in one country can quickly spread to other countries."

A financial crisis in the global economy refers to breaking trust between banks and deep stress in global financial markets. For example, a downturn that starts in the United States will soon spread to the rest of the world, through linkages in the global

financial system. So many banks around the world will have significant losses and will depend on their government that supports them to avoid bankruptcy.

Answer 2

A financial crisis in one country can quickly spread to other countries.