MKT-4.D—Explain (using graphs as appropriate) how real interest rates adjust to restore equilibrium in the loanable funds market

Explain (using graphs as appropriate) how real interest rates adjust to restore equilibrium in the loanable funds market.

• Disequilibrium real interest rates create surpluses and shortages in the loanable funds market. Market forces drive real interest rates toward equilibrium.
• Enduring understanding MKT-4: The interaction of borrowers, who demand loanable funds, and savers, who supply loanable funds, determines the equilibrium real interest rate.