3. Equilibrium in the market for loanable funds The following tables present a hypothetical economy's data on the relationship between various real interest rates and sector specific supply and demand for loanable funds, where the currency is the U.S. dollar Real Interest Rate (Percent) Household Supply (Billions of dollars) 60 Business Supply (one of dollars) 55 Federal Government Supply (Billions of dollars) Foreign Investor Supply (Bwlions of dollars) 60 Municipal Government Supply (Billions of dollars) 7 5 6 50 30 25 50 5 50 30 5 40 30 5 15 4 35 5 25 15 3 30 25 20 5 15 10 5 5 2 25 5 5 Real Interest Rate (Percent) Household Demand (Nons or dollars) 15 Business Demand (Bllons of dollars) 5 Federal Government Demand (Billions of dollars) Foreign Investor Demand (Billions of dollars) Municipal Government Demand (Billions of dollars) 7 5 5 5 10 6 25 20 5 20 5 40 30 5 15 30 40 4 50 40 5 20 3 60 50 5 50 25 65 55 5 60 30 Gven the information in the preceding tables, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points (square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market. Market for Loanable Funds 6 INTEREST RATE (Percent) Equilibrium 0 25 50 TS 100 123 150 175 200 QUANTITY OF LOANABLE FUNDS (Bions of dollars) greater less If the interest rate is 6%, then the quantity of loanable funds supplied would be pressure on the equilibrium interest rate. than the quantity demanded, putting 3. Equilibrium in the market for loanable funds The following tables present a hypothetical economy's data on the relationship between various real interest rates and sector specific supply and demand for loanable funds, where the currency is the U.S. dollar Real Interest Rate (Percent) Household Supply (Billions of dollars) 60 Business Supply (one of dollars) 55 Federal Government Supply (Billions of dollars) Foreign Investor Supply (Bwlions of dollars) 60 Municipal Government Supply (Billions of dollars) 7 5 6 50 30 25 50 5 50 30 5 40 30 5 15 4 35 5 25 15 3 30 25 20 5 15 10 5 5 2 25 5 5 Real Interest Rate (Percent) Household Demand (Nons or dollars) 15 Business Demand (Bllons of dollars) 5 Federal Government Demand (Billions of dollars) Foreign Investor Demand (Billions of dollars) Municipal Government Demand (Billions of dollars) 7 5 5 5 10 6 25 20 5 20 5 40 30 5 15 30 40 4 50 40 5 20 3 60 50 5 50 25 65 55 5 60 30 Gven the information in the preceding tables, use the blue points (circle symbol) to plot the demand for loanable funds. Next, use the orange points (square symbol) to plot the supply of loanable funds. Finally, use the black point (cross symbol) to indicate the equilibrium in this market. Market for Loanable Funds 6 INTEREST RATE (Percent) Equilibrium 0 25 50 TS 100 123 150 175 200 QUANTITY OF LOANABLE FUNDS (Bions of dollars) greater less If the interest rate is 6%, then the quantity of loanable funds supplied would be pressure on the equilibrium interest rate. than the quantity demanded, putting