Final answer:
The cost of credit under the Federal Truth-in-Lending Law is expressed as the Annual Percentage Rate (APR), which includes both interest and other loan-related fees.
Step-by-step explanation:
Under the Federal Truth-in-Lending Law, the cost of credit on certain loans is expressed as the Annual Percentage Rate (APR). This rate includes not just the interest expenses, but also other charges and fees related to the processing of the loan. The law mandates that lenders disclose the APR to borrowers to facilitate a clearer understanding of the loan's true cost and to enable comparison across different credit options.
When discussing price ceilings in financial markets, such as usury laws, these laws are designed to cap the maximum interest rate that can be charged on a loan. For example, if a usury law limits interest rates to no more than 35%, there would likely be a reduction in the amount of loans made to high-risk borrowers, since lenders might not find the returns adequate to offset the risk. At the same time, interest rates for some borrowers might decrease, as lenders try to stay competitive and attract customers within the legal limits.