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How does idea of liquidity trap relate to cyclical asymmetry

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Assignment

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.

Requirements

There are two parts to this assessment. Be sure to complete both parts before submitting.

Part I

• 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.

Part II

• 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.

Reference no: EM131778604

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