Asked by Silvia Montañes Sintes on Jun 14, 2024
Verified
The financial crisis of 2008 showed that:
A) models can be used in all cases to understand financial assets.
B) homeowners were able to pay their mortgages reliably.
C) a faulty economic model can have devastating macroeconomic consequences.
D) the average price of a house should not increase.
Economic Model
A simplified representation of economic processes, used to analyze and predict economic behaviors.
Financial Crisis
A broad term for a variety of situations in which some financial assets suddenly lose a large part of their nominal value, often leading to a collapse of markets and economies.
- Identify the constraints and possible errors in economic models, particularly those arising from incorrect assumptions.
- Grasp the impact of economic models on the understanding and implementation of economic policy.
Verified Answer
BN
Bíchh Ng?ccJun 20, 2024
Final Answer :
C
Explanation :
The financial crisis of 2008 demonstrated that a faulty economic model can have devastating consequences on macroeconomics, as evidenced by the collapse of major financial institutions and widespread economic turmoil.
Learning Objectives
- Identify the constraints and possible errors in economic models, particularly those arising from incorrect assumptions.
- Grasp the impact of economic models on the understanding and implementation of economic policy.