MKT-4.A—a. Define (using graphs as appropriate) the loanable funds market, demand for loanable funds, and supply of loanable funds. b.…

a. Define (using graphs as appropriate) the loanable funds market, demand for loanable funds, and supply of loanable funds. b. Explain (using graphs as appropriate) the relationship between the real interest rate and the quantity of loanable funds demanded (supplied).

• The loanable funds market describes the behavior of savers and borrowers.
• The demand for loanable funds shows the inverse relationship between real interest rates and the quantity demanded of loanable funds.
• The supply of loanable funds shows the positive relationship between real interest rates and the quantity supplied of loanable funds.
• Enduring understanding MKT-4: The interaction of borrowers, who demand loanable funds, and savers, who supply loanable funds, determines the equilibrium real interest rate.