Principles of Macroeconomics / Unit 2 MAC 0137 short lesson, about 20 seconds
Usury Laws as a Price Ceiling
Captions available
The idea
A usury law caps the interest rate a lender may charge: a price ceiling in the credit market. Where it binds it creates a shortage of credit.
In practice
Lenders ration by refusing the riskiest applicants rather than by charging them more.
Where people slip
Most caps sit above market rates and do nothing: the non-binding case again.
Your place on the trail
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Unlocks
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