is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded Suppose the interest rate is 5.5%. 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 rates they charge, thereby the quantity of loanable funds supplied and the quantity of loanable fu greater ded, moving the market toward the equilibrium interest rate of % lessv is the source of the demand for loanable funds. As the interest rate falls, - tity of loanable funds demanded V . Suppose the interest rate is 5.5%. Based on the previous graph, the quantity of loanable fu ied 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 % . e demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded Suppose the interest rate sed on the previous graph, the quantity of loanable funds supplied is 7 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 "lo . 3. 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. 10 CO Supply 6 INTEREST RATE (Percent) w Demand 2 0 100 0 300 400 500 600 700 800 900 1000 LOANABLE FUNDS (Billions of dollars)v is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded v . , decreases - nterest rate is 5.5%. Based on the previous graph, the quantity of loanable funds supplied is '7 than the quantity of loans sulting 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 "/o . v is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded Saving terest rate is 5.5%. Based on the previous graph, the quantity of loanable funds supplied is 7 than the quantity of loans ulting 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 "/0 . v is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded 7 increasing Suppose the interest rate is 5.5%. Based on the previous gra- _ y of loanable funds supplied is V than the quantity of loans demanded, resulting in a v of loanable funds. Th decreasmg rage lenders to v the interest rates they charge, thereby Y the quantity of loanable funds supplied and v the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of % . v is the source of the demand for loanable funds. As the interest rate falls, the quantity of loanable funds demanded v increasing terest rate is 5.5%. Based on the previous graph, the quantity of loanable funds supplied is V than the quantity of loans decreasing ulting 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 %