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How low interest rates contribute to bubble in housing price

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Assignment

Read the article ''Bernanke Says Low Rates Didn't Fuel Bubble'' by By KRISTINA PETERSON and JEFFREY SPARSHOTT dated March 22, 2012, 8:10 p.m. ET and answer the following Qns.

1. What is an asset pricing bubble?

2. How might low interest rates contribute to a bubble in housing prices?

3. What arguments does Ben Bernanke make to support his statement that the Federal Reserve's low-interest-rate polices in the early 2000s did not cause the recent housing bubble? Do you find his arguments convincing? Explain.

Reference no: EM131642585

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