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Card 11 / 17:
If a usury law limits interest rates to no more than 35%, what would the likely impact be on the amount of loans made and interest rates paid?
If market interest rates stay in their normal range, an interest rate limit of 35% would not be binding. If the equilibrium interest rate rose above 35%, the interest rate would be capped at that rate, and the quantity of loans would be lower than the equilibrium quantity, causing a shortage of loans.
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