Loanable funds market
7:32
Khan Academy
Loanable funds market
Loanable funds are the supply and demand of funds that can be lent out to borrowers. Key players in this market include savers (the suppliers) and borrowers (the demanders). Learn about the role that the real interest rate plays, and how shifts in the supply or demand for loanable funds can impact real interest rate and quantity of funds available.
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SOLVED:Use the market for loanable funds shown in the accompanying diagram to explain what happens to private savings, private investment spending, and the interest rate if each of the following events occur. Assume that there are no capital inflows or outflows. a. The government reduces the size of its deficit to zero. b. At any given interest rate, consumers decide to save more. Assume the budget balance is zero. c. At any given interest rate, businesses become very optimistic about the future
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