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3. Supply and demand for loanable funds The following graph shows the market for loanable fundsin a closed economy. The upward-sloping orange line represents the

3. Supply and demand for loanable funds

The following graph shows the market for loanable fundsin 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.

6 5 Supply 4 INTEREST RATE (Percent) 3 2 Demand N 0 100 200 300 400 500 600 LOANABLE FUNDS (Billions of dollars)

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