Final answer:
A usury law capping interest rates at 35% would result in a decrease in the amount of loans made and a decrease in interest rates paid, as lenders may restrict lending to higher-risk borrowers when rates are capped, the correct option is A).
Step-by-step explanation:
If a usury law limits interest rates to no more than 35%, the likely impact on the amount of loans made and interest rates paid would be a decrease in the amount of loans made and a decrease in interest rates paid.
When the usury ceiling is above the equilibrium interest rate, the cap is not binding, and loans operate at market rates. However, if market interest rates rise above 35%, which is the maximum allowed by the usury law, then lenders may not extend credit to higher-risk borrowers, leading to a decline in the total amount of loans made.
This limit on interest rates could also mean that lenders tighten their standards for giving out loans in order to minimize risk, further reducing loan availability. Therefore, the correct answer in this scenario would be (a) Decrease in loans made; decrease in interest rates paid.