Question

4. Supply and demand for loanable funds 

The following graph shows the market for loanable funds in a dosed 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 4.5%. 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 _______%.

Answer 1

Blanks-

1) Saving

2) decreases

3) greater

4) surplus

5) lower

6) decreasing

7) increasing

8) 4%