In the context of financial crises, the 'Third-Generation' models emphasise:
A. Only speculative attacks on overvalued fixed exchange rates without financial factors
B. Balance-sheet effects, currency mismatches and financial fragility
C. Only current-account deficits
D. Only fiscal deficits
Answer: Option B
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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