Asked by Gaurab Dhakal on Jul 04, 2024
Verified
Effective usury laws cause
A) a surplus in the market for loanable funds.
B) the quantity of loanable funds demanded to be brought into balance with the quantity supplied.
C) the quantity of loanable funds demanded to exceed the quantity supplied.
D) the quantity of loanable funds supplied to exceed the quantity demanded.
Effective Usury Laws
Regulations that set maximum interest rates on loans to protect consumers from excessively high costs.
Loanable Funds
The money available for borrowing in the financial markets, often coming from savings and influenced by interest rates.
- Assess the ramifications of laws on usury concerning the economy, particularly focusing on how they affect loan accessibility and the functioning of market mechanisms.
Verified Answer
AB
Adrian BakshJul 05, 2024
Final Answer :
C
Explanation :
Usury laws set a maximum interest rate on loans, which can lead to a situation where the quantity of loanable funds demanded exceeds the quantity supplied, as lower interest rates increase demand but may decrease the supply from lenders.
Learning Objectives
- Assess the ramifications of laws on usury concerning the economy, particularly focusing on how they affect loan accessibility and the functioning of market mechanisms.