The Fundamentals of the Financial System Quiz

The main components are institutions, intermediaries, market, and infrastructure. The main function is the efficient allocation of resources, with auxiliary functions in risk management and value exchange.

A financial bubble is either a sharp increase followed by a sharp decrease in the market value of an asset, or a consistently increasing deviation from the fundamental value of an asset.

A financial crisis is a type of crisis where the financial system is unable or severely hindered in performing its functions.

<p>The different types of financial crisis include currency crisis, stock market crash, banking crisis (solvency or liquidity crisis), sovereign debt crisis, and multi-crisis.</p> Signup and view all the answers

<p>Financial bubbles and crises can lead to economic crises when they disrupt the efficient allocation of resources and hinder the functioning of the financial system.</p> Signup and view all the answers