Loanable Funds Market
Is in interest rate of 50% good or bad. Bad for borrowers but good for lenders.
The loanable funds market is the private sector supply and demand of loans.
This market brings together those who want to lend money(savers) and those who want to borrow(firms with investment spending projects)
- This market shows the effect on REAL INTEREST RATE
- Demand- Inverse relationship between real interest rate and quantity loans demanded
- Supply- Direct relationship between real interest rate and quantity loans supplied
This is NOT the same as the money market (supply is not vertical)
For more understanding:
For more understanding:
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