College Finance Homework Help

Off Topic
1

Long time lurker whose first post will be a homework question…

Anyway, senior finance major and need two answer these two questions.

  1. Why the zero-lower-bounds on interest rate can be a serious problem?
  2. Why price and output stability do not ensure financial stability?

Any finance whizzes out there know how to answer either of them. Completely stuck, thanks for the help in advance.

2

[quote]johnsperry428 wrote:
Long time lurker whose first post will be a homework question…

Anyway, senior finance major and need two answer these two questions.

  1. Why the zero-lower-bounds on interest rate can be a serious problem?
  2. Why price and output stability do not ensure financial stability?

Any finance whizzes out there know how to answer either of them. Completely stuck, thanks for the help in advance.[/quote]

Well zero bounds on interest can be a become a major catalyst to entering a state of BROKE AS FUCK!!!

First post ever is asking how to do your homework? LAME

3

I’m gonna go out on a limb and say the answer is probably in the required text.

4

If you’re in a deflationary state, then a positive interest rate means that borrowing money is especially costly.

Similarly, if you’re a believer in Keynsian economics, then the government can’t keep offering more money to prop things up once the interest rate reaches 0.