7. Supply for loanable funds shifts to the right while the constant. 8. Supply for loanable funds shifts to the left while the constant. 9. Demand for loanable funds shifts to the right while th constant. 10. Demand for loanable funds shifts to the left while th

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.