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Unformatted text preview: The loanable funds market is illustrated in Figure 1 . The demand curve for loanable funds is downward sloping, indicating that at lower interest rates borrowers will demand more funds for investment. The supply curve for loanable funds is upward sloping, indicating that at higher interest rates lenders are willing to lend more funds to investors. The equilibrium interest rate is determined by the intersection of the demand and supply curves for loanable funds, as indicated in Figure 1 . Figure 1 Determination of the equilibrium interest rate...
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This note was uploaded on 11/19/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.
- Fall '10