What is the main characteristic of a financial crisis?

The main characteristic of a financial crisis is characterized by severe disruptions in financial markets, often leading to significant declines in asset prices. During a financial crisis, the interconnectedness of markets can cause widespread panic, resulting in a rapid loss of confidence among investors. This can trigger a sell-off of assets, causing their prices to plummet, and may also lead to liquidity issues where financial institutions struggle to meet obligations.

In contrast, increased asset prices and stability suggest a healthy financial environment, which is not indicative of a crisis. A minor disruption in financial markets would not escalate to the level of a crisis, and a rise in consumer confidence typically reflects a stable or growing economy, not one in crisis. Therefore, option C accurately captures the essence of a financial crisis through its focus on the severe disruptions and declines in asset prices that are pivotal during such events.