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Unformatted text preview: If the rate of interest is somewhat higher, for instance, like r 1, then supply of saving s1 will exceed demand for loanable funds d1 (s1 > d1). Therefore some savers will try to push down the rate of interest and move in the direction of the point e . On the other hand, if the actual rate of interest is lower (r2) then the demand for loanable funds, d2, exceeds supply of savings s2 (d2 > s2 )....
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This note was uploaded on 11/26/2011 for the course EC ec 201 taught by Professor - during the Fall '10 term at Montgomery.
- Fall '10