A usury ceiling will be effective depending on
A)whether the usury rate is above 10 percent.
B)whether the usury rate is above 8 percent.
C)whether that rate is below what the equilibrium rate of interest would have been in a free market.
D)how well organized the lending institutions are.

Question

Quizplus · Accepted Answer

A usury ceiling will only be effective if it is set below the equilibrium interest rate that would have existed in a free market. If the usury ceiling is above this rate, lenders will simply not lend money due to the potential loss in profit. The effectiveness of a usury ceiling is not determined by a specific percentage, but rather whether it is set below the market rate. The organization of lending institutions is not a determining factor in the effectiveness of a usury ceiling.

A Usury Ceiling Will Be Effective Depending on