5 5 chapter 05 the determinants of interest rates

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Chapter 05 - The Determinants of Interest Rates: Competing Ideas 11. What are the principal limitations of the liquidity preference theory of interest?
12. What are loanable funds ? Why is this term important?
13. What factors make up the total demand for loanable funds? The total supply of loanable funds? List and define each of these demand and supply factors.
14. Explain how the equilibrium loanable funds interest rate is determined. Draw a graph to illustrate what the equilibrium rate of interest might look like. . Please refer to Exhibit 5.5 in the text for a graph of the equilibrium rate of interest
under the Loanable Funds theory.

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