Answered: Many countries have policies that limit…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

EXERCISE 10.9 LIMITS ON LENDING

Many countries have policies that limit how much interest a moneylender can charge on a loan.

Do you think these limits are a good idea?
Who benefits from the laws and who loses?
What are likely to be the long-term effects of such laws?

Tips:

For Question 2, you may think about how a low interest rate would affect the poor and those who owe huge debts.

For Question 3, you may think about how it would affect the profitability of the banking sector and the supply of lending (will lenders be encouraged to lend more?), and what implications it may have for "credit rationing" (being credit constrained).

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions