Default

Real World Example

Historically, the concept of default has been important during financial crises, like the 2008 Global Financial Crisis, when many individuals and institutions could not meet their loan obligations. This situation was crucial because it led to widespread economic instability, job losses, and even the collapse of major financial institutions. Default responds to the problem of financial overextension and inability to repay borrowed funds, highlighting the importance of responsible lending and borrowing practices. Today, default is still relevant because it affects personal credit scores, which determine one's ability to borrow money for things like buying a home or car. For example, if someone defaults on their student loan, they may find it harder to get a mortgage in the future, impacting their ability to buy a house.