In 3–4 pages, explain how declines in real estate values, subprime mortgage loans, and mortgage backed securities relate to the financial crisis of 2007–2008. Analyze the idea that monetary policy can exhibit cyclical asymmetry.
There are two parts to this assessment. Be sure to complete both parts before submitting.
• Explain how each of the following relate to the financial crisis of 2007–2008:
o Declines in real estate values.
o Subprime mortgage loans.
o Mortgage-backed securities.
• Analyze what economists mean when they say that monetary policy can exhibit cyclical asymmetry.
o How does the idea of a liquidity trap relate to cyclical asymmetry?
o Why is the possibility of a liquidity trap significant to policymakers?
Organize your assessment logically with appropriate headings and subheadings. Support your work with at least 3 scholarly or professional resources and follow APA guidelines for your citations and references. Be sure to include a title page and reference page.