-If the dotted horizontal line represents the effect of a usury law,then there is a ____ of loanable funds of ___ billion dollars.

Question

Quizplus · Accepted Answer

A usury law sets a maximum interest rate on loans. If the dotted horizontal line is below the equilibrium interest rate, it means the maximum legal rate is lower than what the market would naturally set. This leads to a higher quantity of loanable funds demanded than supplied, creating a shortage. The specific amount of the shortage depends on the difference between the quantities demanded and supplied at the usury law rate, which, based on the information provided, is 150 billion dollars.

-If the Dotted Horizontal Line Represents the Effect of a Usury