The financial meltdown in 2008-2009 was partially the result of a faulty economic model that underestimated the risk of mortgage-backed securities.

Question

Quizplus · Accepted Answer

The faulty economic model, which did not accurately assess the risk of mortgage-backed securities, played a significant role in causing the financial crisis of 2008-2009. Many financial institutions were heavily invested in these securities, which ultimately proved to be much riskier than originally anticipated. As a result, when the housing market collapsed, many of these institutions were left with significant losses, leading to a wider economic downturn.

The Financial Meltdown in 2008-2009 Was Partially the Result of a Faulty