- 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 MONEY MARKET (supply is not vertical)
Prime Rate: it is the interest rate that banks charge their most creditworthy customers
Click the link below for more information on loanable funds:
Loanable Funds
Great notes! I would definitely add videos on your blog to gain a deeper understanding of what your notes talk about. Love the simplicity though- keep it up!
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