Suppose that, prior to the passage of the Truth in Lending Simplification Act and Regulation Z, the demand for consumer loans was given by Qpre-TILSA = 12 - 100P (in billions of dollars) and the supply of consumer loans by credit unions and other lending institutions was QSp pre-TILSA=5+100P (in billions of dollars). The TILSA now requires lenders to provide consumers with complete information about the rights and responsibilities of entering into a lending relationship with the institution, and as a result, the demand for loans increased to Qpost-TILSA 18-100P (in billions of dollars). However, the TILSA also imposed "compliance costs" on lending institutions, and this reduced the supply of consumer loans to Qpost-TILSA = 3 + 100P (in billions of dollars). Based on this information, compare the equilibrium price and quantity of consumer loans before and after the Truth in Lending Simplification Act. (Note: Q is measured in billions of dollars and P is the interest rate). Instructions: Enter your responses for the equilibrium price in percentage terms, and round all responses to one decimal place. Equilibrium price (interest rate) before TILSA: percent Equilibrium quantity (in billions of dollars) before TILSA: $ Equilibrium price (interest rate) after TILSA: percent billion
Suppose that, prior to the passage of the Truth in Lending Simplification Act and Regulation Z, the demand for consumer loans was given by Qpre-TILSA = 12 - 100P (in billions of dollars) and the supply of consumer loans by credit unions and other lending institutions was QSp pre-TILSA=5+100P (in billions of dollars). The TILSA now requires lenders to provide consumers with complete information about the rights and responsibilities of entering into a lending relationship with the institution, and as a result, the demand for loans increased to Qpost-TILSA 18-100P (in billions of dollars). However, the TILSA also imposed "compliance costs" on lending institutions, and this reduced the supply of consumer loans to Qpost-TILSA = 3 + 100P (in billions of dollars). Based on this information, compare the equilibrium price and quantity of consumer loans before and after the Truth in Lending Simplification Act. (Note: Q is measured in billions of dollars and P is the interest rate). Instructions: Enter your responses for the equilibrium price in percentage terms, and round all responses to one decimal place. Equilibrium price (interest rate) before TILSA: percent Equilibrium quantity (in billions of dollars) before TILSA: $ Equilibrium price (interest rate) after TILSA: percent billion
Chapter33: Income, Income Distribution, And Poverty
Section: Chapter Questions
Problem 11E: What is the difference between in-kind and cash transfers? Winch might increase the utility of the...
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