Economics 19th Edition by Stanley Brue, Cambell McConnell, Campbell McConnell, Sean Masaki Flynn, Sean Flynn

Exercise 2

Suppose that the demand forfunds for carin the Milwaukee area is $10 million per month at an interest rate of 10 percent per year, $11 million at an interest rate of 9 percent per year, $12 million at an interest rate of 8 percent per year, and so on. If the supply offunds is fixed at $15 million, what will be the equilibrium interest rate If the government imposes a usury law and says that carcannot exceeD³ percent per year, how big will the monthly shortage (or excess demand) for carbe What if the usury limit is raised to 7 percent per year