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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