Suppose the government believes that interest rates are too high and that this is deterring investment by firms. The government introduces a maximum interest rate of 6%: no saver may charge more than 6% on any loan that they make. Will this policy lead to additional investment by firms? Draw a diagram to illustrate the consequences of this policy.

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter9: An Introduction To Basic Macroeconomic Markets
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 Suppose the government believes that interest rates are too high and that
this is deterring investment by firms. The government introduces a maximum interest rate of 6%:
no saver may charge more than 6% on any loan that they make. Will this policy lead to additional
investment by firms? Draw a diagram to illustrate the consequences of this policy. 

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