Suppose the interest rate is 3.5%. Based on the previous graph, the quantity of loanable funds supplied is

4. Supply and demand for loanable funds

The following graph shows the market for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the downward-sloping blue line represents the demand for loanable funds.

_______ is the source of the supply of loanable funds. As the interest rate falls, the quantity of loanable funds supplied _______

Suppose the interest rate is 3.5%. Based on the previous graph, the quantity of loanable funds supplied is _______ than the quantity of loans demanded, resulting in a _______ of loanable funds. This would encourage lenders to _______ the interest rates they charge, thereby _______ the quantity of loanable funds supplied and _______ the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of_______

Solutions

Expert Solution

Blanks are answered in order

Saving; decreases

Greater ; surplus ; decrease ; decreasing ; increasing ; 3%

Rahul Sunny answered 2 years ago

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