The 2008 Financial Crisis: AP Macroeconomics Study Guide
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AP Macroeconomics Connections
The 2008 crisis is a key case study for unconventional monetary policy: with the federal funds rate already near zero, the Fed turned to quantitative easing — large-scale asset purchases — as a new tool, a concept increasingly tested on the AP Macro exam. It also illustrates systemic risk: how failures in one part of the financial system (mortgage securities) can cascade through the whole economy.
Key Terms to Know
- Subprime mortgage
- Securitization
- Quantitative easing
- Too big to fail
- Systemic risk
- TARP (Troubled Asset Relief Program)