- Loanable Funds Market
- The loanable funds market is the private sector supply & demand of loans.
- This market brings together those who want to lend money (savers) & those who want to borrow (firms w/ investment spending projects)
- This market shows the effect on real interest rate
- Demand: Inverse relationship between real interest rate & quantity loans demanded.
- Supply: Direct relationship between real interest rate & quantity loans supplied.
- This is NOT the same as the money market (supply is not vertical).
- Prime Rate
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