Suppose that, prior to the passage of the Truth in Lending Simplification Act and Regulation Z,the demand for consumer loans was given by Qd pre–TILSA = 12 – 100P (in billions of dollars) and the supply of consumer loans by credit unions and other lending institutions was Qspre–TILSA = 5 + 100P (in billions of dollars). The TILSA now requires lenders to provide consumers with complete information about the rights and responsibilities of entering into a lending relationship with the institution, and as a result, the demand for loans has increased to Qdpost–TILSA=18–100P (in billions of dollars). However, the TILSA also imposed “compliance costs” on lending institutions, and this reduced the supply of consumer loans to Qspost–TILSA = 3 + 100P (in billions of dollars). Based on this information, compare the equilibrium price and quantity of consumer loans before and after the Truth in Lending Simplification Act.
Suppose that, prior to the passage of the Truth in Lending Simplification Act and Regulation Z,the
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