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(Solved): The following graph shows the markek for loanable funds in a closed economy. The upward-sloping ora ...
The following graph shows the markek for loanable funds in a closed economy. The upward-sloping orange line represents the supply of loanable funds, and the dowrward-sloping blue line represents the demand for loanable funds.
Is the source of the supply of loanable funds. As the interest rate falls, the quantty of loanable funds supplied Suppose the interest rate is 4.5%. Based on the previous graph, the quantity of loanoble funds susplied is demanded, resulting in a of loanable funds. This would encourage lenders to the interest rates they charge, thereby the quanticy of loanable funds supplied and the equilibrium interest rate of the quantity of loanable funds demanded, moving the market toward