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12 May, 02:37

Financial panic begins & leads to an economic depression. True or False

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  1. 12 May, 02:45
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    Answer: false

    Explanation:

    A financial panic is when depositors in banks try to withdraw their money and investors try to sell their financial assets. It usually occurs when their is a loss of trust in the financial system. The loss of trust could be as a result of bank failures or stock market crash.

    Depression is when recession exists for a long period of time.

    Although, financial panics have predated economic depression in history, this doesn't have to be the case if the financial panic there's a quick intervention and proper management of the panic.
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