In the context of financial crises, the 'Third-Generation' models emphasise:
A. Only fiscal deficits
B. Only speculative attacks on overvalued fixed exchange rates without financial factors
C. Only current-account deficits
D. Balance-sheet effects, currency mismatches and financial fragility
Answer: Option D
Solution (By JKSSB Mock Tests)
Third-generation crisis models highlight the role of financial-sector fragility, foreign-currency debt, and balance-sheet effects in amplifying currency and banking crises.
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