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. 6 Supply W INTEREST RATE (Percent) 2 Demand 100 200 300 400 500 600 LOANABLE FUNDS (Billions of dollars)V is the source of the demand for loanable funds. As the interest rate falls, the quantityr of loanable funds demanded V Suppose the interest rate is 3.5%. Based on the previous graph, the quantity of loanable funds supplied is V than the quantity of loans demanded, resulting in a V of loanable funds. This would encourage lenders to V the interest rates they charge, thereby V the quantity of loanable funds supplied and V the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of . is the source of the demand for loanable funds. As the interest rate falls, the quantity of Saving Investment terest rate is 3.5%. Based on the previous graph, the quantity of loanable funds supplied is Ucmanacamresulting in a of loanable funds. This would encourage lenders to the the quantity of loanable funds supplied and the quantity of loanable fund the equilibrium interest rate of %is the source of the demand for loanable funds. As the interest rate falls, the quantity decreases nterest rate is 3.5%. Based on the previous graph, the quantity of loanable funds supplied increases sulting in a of loanable funds. This would encourage lenders to the quantity of loanable funds supplied and the quantity of loanable the equilibrium interest rate ofthe demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded Based on the previous graph, the quantity of loanable funds supplied is than the quantity of loans of loanable funds. This would encourage lenders to th ates they charge, thereby banable funds supplied and the quantity of loanable fur greater ded, moving the market toward % lessis the source of the demand for loanable funds. As the interest rate falls, the qua surplus shortage Suppose the interest rate ased on the previous graph, the quantity of loanable funds supp demanded, resulting in a of loanable funds. This would encourage lenders to the quantity of loanable funds supplied and the quantity of loana the equilibrium interest rate ofloanable funds. As the interest rate falls, the quantity of loanable funds demanded raise lower previous graph, the quantity of loanable fun ied is than the quantity of loans ble funds. This would encourage lenders to the interest rates they charge, thereby supplied and the quantity of loanable funds demanded, moving the market towardis the source of the demand for loanable funds. As the interest rate falls, the qua increasing terest rate is 3.5%. Based on the previous graph, the quantity of loanable funds supp decreasing sulting in a of loanable funds. This would encourage lenders to the quantity of loanable funds supplied and the quantity of loana the equilibrium interest rate ofe source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded increasing te is 3.5%. Based on the previous grap ty of loanable funds supplied is than the quantity decreasing a of loanable funds. Th urage lenders to the interest rates they charge, the quantity of loanable funds supplied and the quantity of loanable funds demanded, moving the mar rate of %
