Refer to the Graph of the Supply and Demand for Loanable

question 272

Multiple Choice

Refer to the graph of the supply and demand for loanable funds. Assume that the government sets a 10 percent limit on the interest rate that banks can charge to customers for credit card loans. In this case, the quantity of loanable funds

• A)demanded will exceed the quantity supplied by $150 billion.
• B)demanded will exceed the quantity supplied by $100 billion.
• C)demanded will exceed the quantity supplied by $50 billion.
• D)supplied will exceed the quantity demanded by $50 billion.

---

Definitions:

Inferior Good

A type of good for which demand decreases as the income of consumers increases, opposite to normal goods where demand increases with rising income.

Product X

A placeholder term for an unspecified or hypothetical product used in discussions or analyses.

Income Elasticity of Demand

A measure of how much the quantity demanded of a good changes in response to a change in consumer income.

Consumer Income

The total earnings of consumers, which determines their purchasing power and ability to consume goods and services.