A major purpose of usury laws is to make more funds available to low-income borrowers. Economic analysis suggests that usury laws
A) are effective in achieving this goal.
B) allocate available funds to high-income borrowers.
C) have no impact on the allocation of funds between high-income and low-income people.
D) help low-income people only when the legal interest rate is above the market rate.

Question

Quizplus · Accepted Answer

Usury laws set a maximum interest rate that lenders can charge, which can lead to a shortage of available credit. Lenders may prefer to lend to high-income borrowers who are perceived as lower risk, thus reducing the availability of funds for low-income borrowers.

A Major Purpose of Usury Laws Is to Make More