Hannah Miller 11/1/2010 Macro 2023 4 th edition book Chapter 24 1. The government regulates interest rates on credit cards because if they didn’t the prices would sky rocket and be completely out of hand. So many people have heard of credit card stories and fake company’s trying to scam people so the government stepping in is a way of enforcing the rules and regulating what can and cannot be done. Commercial credit is a different from interest rates on credit cards because the businesses are less likely to be taken advantage of, yet they are still affected. The new rules provided for interest rates have changed the way companies do business resulting in less credit at a higher price. 2. The reduction in the profits of handing out credit cards means fewer loans are being made. Because of this people have much more incentive to search elsewhere to grasp hold of funds. Although the other options may have far less benefits and could be more costly the borrowers still sees it at the better choice. People turn to there second choice
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