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. INTEREST RATE (Percent) 9 8 0 0 100 Supply Demand 200 300 400 500 600 700 800 900 1000 LOANABLE FUNDS (Billions of dollars)
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. INTEREST RATE (Percent) 9 8 0 0 100 Supply Demand 200 300 400 500 600 700 800 900 1000 LOANABLE FUNDS (Billions of dollars)
Chapter21: Financial Markets, Saving, And Investment
Section: Chapter Questions
Problem 9P
Related questions
Question
![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.
INTEREST RATE (Percent)
9
8
0
0
100
Supply
Demand
200 300 400 500 600 700 800 900 1000
LOANABLE FUNDS (Billions of dollars)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F13cc1543-cfbb-4202-a6e6-cc1918c1b356%2Fe03c16ec-7476-4b25-9d28-df19c835d0f5%2Fhlefndk_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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.
INTEREST RATE (Percent)
9
8
0
0
100
Supply
Demand
200 300 400 500 600 700 800 900 1000
LOANABLE FUNDS (Billions of dollars)
![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
demanded, resulting in a
of loanable funds. This would encourage lenders to
the quantity of loanable funds supplied and,
the equilibrium interest rate of
than the quantity of loans
the interest rates they charge, thereby
the quantity of loanable funds demanded, moving the market toward](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F13cc1543-cfbb-4202-a6e6-cc1918c1b356%2Fe03c16ec-7476-4b25-9d28-df19c835d0f5%2Fhil5sfm_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
demanded, resulting in a
of loanable funds. This would encourage lenders to
the quantity of loanable funds supplied and,
the equilibrium interest rate of
than the quantity of loans
the interest rates they charge, thereby
the quantity of loanable funds demanded, moving the market toward
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