During a financial crisis, the overall economic output is likely to?

During a financial crisis, overall economic output typically decreases sharply due to several interconnected factors. A financial crisis often leads to reduced consumer confidence and spending, which in turn causes businesses to cut back on investments and hiring. This can trigger a cycle of increased unemployment and lower disposable incomes, further suppressing demand for goods and services.

Additionally, during a financial crisis, access to credit becomes more restricted as financial institutions face liquidity issues and heightened risk aversion. This can lead to a contraction in lending, making it difficult for businesses and consumers to finance their activities. With decreasing economic activity, production levels decline, contributing to a drop in Gross Domestic Product (GDP), which is a key measure of overall economic output.

While there might be sectors that could experience growth during specific crises, the overall trend is a decrease in economic output due to widespread negative impacts on various parts of the economy.