Which of the following explains the phenomenon of crisis? I. A sudden collapse in the marginal efficiency of capital II. Increase in the rate of interest causing the decline in investments III. A sudden and violent substitution of upward movement by a downward tendency IV. Decline in the liquidity preference of the investors
Explanation:
Statements I, II and III are correct as they are explicitly mentioned in the explanation of a crisis in paragraph 2. Statement IV is incorrect as it is completely out of context with regards to the passage. Hence, the correct answer is option 2.
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