Some Governments Enact Usury Laws, Which Hold the Interest Rate

question 15

Multiple Choice

Some governments enact usury laws, which hold the interest rate below its equilibrium level. Economic analysis indicates that under such laws,

• A) saving would increase.
• B) borrowers would demand less from the loanable funds market.
• C) anyone who wanted to borrow would be happy with the lower interest rate.
• D) there would be a shortage of loanable funds, necessitating rationing by some means other than the price (interest rate).

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Definitions:

Exchange Conditions

Refers to the set of terms, rules, and circumstances under which trades or exchanges happen in a market.

Immediate Delivery

involves the rapid dispatch of products or services to customers soon after their order is placed.

Exchange

A process where two parties come to a mutual agreement to trade goods, services, or information.

Supply Chain

The network of all the individuals, organizations, resources, activities, and technology involved in the creation and sale of a product, from the delivery of source materials from the supplier to the manufacturer, and to its eventual delivery to the end user.