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Chapter 4: Q. 19 (page 105)

Would usury laws help or hinder the resolution of a shortage in financial markets?

Short Answer

Expert verified

Yes, because monopoly restrictions make lending less profitable, they would make resolving a shortfall more difficult.

Step by step solution

01

Step 1:Defination

Market:

The term "market" refers to the various locations where vendors and buyers might meet to exchange goods or conduct business. Various commodities have prices in the market, and purchasers can purchase them by paying for them. Furthermore, unlike the barter trade system, markets use cash to facilitate and simplify transactions.

02

Explanation

The resolution of a financial market shortfall will be hampered by anti-trust legislation. A shortage implies that increasing the interest rate will reduce the quantity demanded of loans while increasing the quantity supplied, bringing the amount demanded and supplied of loans closer to equilibrium.

the result of the market, As a result, there would be a constant scarcity of finances.

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