Asked by Kaela Warriner on Jun 16, 2024
Verified
If the dotted horizontal line represents the effect of a usury law then there is a _____ of loanable funds of _________ billion dollars.
A) surplus;50
B) shortage;50
C) surplus;110
D) shortage;110
Usury Law
Regulations governing the maximum interest rate that can be charged on loans, aimed at protecting consumers from excessively high rates.
Loanable Funds
A theory in economics that suggests the market interest rate is determined by the demand for and supply of money available for lending.
- Explain the relationship between usury laws and their effect on interest rates, including how they influence both borrowers and lenders.
Verified Answer
TZ
Trillest ZariTvJun 22, 2024
Final Answer :
B
Explanation :
A usury law sets a maximum interest rate on loans, which typically results in a shortage of loanable funds because the interest rate is set below the equilibrium rate, leading to higher demand and lower supply than at equilibrium.
Learning Objectives
- Explain the relationship between usury laws and their effect on interest rates, including how they influence both borrowers and lenders.