The Loanable Funds Market

Front

What does the loanable funds market illustrate?

Back

The interaction of borrowers and savers in the economy

Front

What happens when real interest rates increase?

Back

The quantity of loanable funds demanded decreases

Front

Which factor increases the demand for loanable funds? Options: High rate of inflation predicted, Decrease in loans, credit, and borrowing, Decrease in deficit spending, Increase in foreign demand for domestic currency

Back

Increase in foreign demand for domestic currency

Front

What is the relationship between real interest rates and the quantity of loanable funds supplied?

Back

Direct, or positive

Front

What leads to an increase in the supply of loanable funds? Options: Decrease in foreign purchases of domestic assets, Decrease in the discount rate by the Federal Reserve, High rate of inflation predicted, Consumers increase their consumption

Back

Decrease in the discount rate by the Federal Reserve

Front

What does deficit spending by the government do to the demand for loanable funds?

Back

It increases the demand

Front

What happens to the real interest rate when the supply of loanable funds decreases?

Back

It increases

Front

What is the role of the Federal Reserve mentioned in the context of the loanable funds market?

Back

It controls the discount rate affecting the supply of loanable funds.

Front

What does an increase in savings rate do to the supply of loanable funds?

Back

Increases the supply

Front

What is the effect of foreign purchases of domestic assets on the supply of loanable funds?

Back

Increases the supply