Author Question: What is the impact of an interest ceiling on bank deposits but not on ... (Read 31 times)

EAugust · **on:** Jun 30, 2018

What is the impact of an interest ceiling on bank deposits but not on loans?

Question 2

A perfectly competitive firm spends a significant part of its revenue on advertisements, and tries to sell more by reducing its price below the market price.
a. True
b. False
Indicate whether the statement is true or false

annierak · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

An interest ceiling on bank deposits lowers the quantity supplied of loanable funds and raises the rate of interest charged on loans. Banks enjoy greater amount of profits by borrowing at a low rate of interest from depositors and lending out the funds at a high rate of interest to the borrowers (investors).

Answer to Question 2

False