Question
Suppose that the demand for loanable funds for car loans in the Milwaukee area is $11 million per month at an interest rate of 10
Suppose that the demand for loanable funds for car loans in the Milwaukee area is $11 million per month at an interest rate of 10 percent per year, $12 million at an interest rate of 9 percent per year, $13 million at an interest rate of 8 percent per year, and so on.
Instructions:Enter your answers as whole numbers.
a.If the supply of loanable funds is fixed at $15 million, what will be the equilibrium interest rate?
________ percent per year
b.If the government imposes a usury law and says that car loans cannot exceed 3 percent per year, how big will the monthly shortage (or excess demand) for car loans be?
_________ million worth of car loans per month
c. How big will the monthly shortage for car loans be if the usury limit is raised to 7 percent per year?
____________ million worth of car loans per month
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