What is a Financial CrisA financial crisis occurs when there is a particularly large disruption to information flows in financial markets, with the result that financial frictions increase sharply and financial markets stop functioning Asset Markets Effects on Balance SheetsStock market declineDecreases net worth of corporations.Unanticipated decline in the price level Liabilities increase in real terms and net worth decreases.Unanticipated decline in the value of the domestic currencyIncreases debt denominated in foreign currencies and decreases net worth.Asset write-downs.is?
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