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The financial meltdown in 2008-2009 was partially the result of a faulty economic model that misestimated the value of mortgage-backed securities.
Mortgage-backed Securities
Financial instruments created by pooling together mortgages and selling interests in that pool to investors, transferring the mortgage-related risks.
Financial Meltdown
A severe and sudden downturn in financial markets, leading to a loss of asset values and confidence in the financial system.
Economic Model
A simplified representation of economic processes, used to analyze and predict economic behaviors and outcomes.
- Recognize the significance of economic models and their role in analyzing real-world situations.
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Learning Objectives
- Recognize the significance of economic models and their role in analyzing real-world situations.
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