$480 billion. At this above-equilibrium interest rate, firms are eager to supply loans to credit card borrowers,

but relatively few people or businesses wish to borrow. As a result, some credit card firms will lower the

interest rates (or other fees) they charge to attract more business. This strategy will push the interest rate down

toward the equilibrium level.

If the interest rate is below the equilibrium, then excess demand or a shortage of funds occurs in this market.

At an interest rate of 13%, the quantity of funds credit card borrowers demand increases to $700 billion, but

the quantity credit card firms are willing to supply is only $510 billion. In this situation, credit card firms will

perceive that they are overloaded with eager borrowers and conclude that they have an opportunity to raise

interest rates or fees. The interest rate will face economic pressures to creep up toward the equilibrium level.
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