In the loanable funds framework, who supplies funds?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $9.99Unlock all

Study for The Mother of Economy Test. Prepare with diverse questions that include hints and explanations. Ensure you're ready for success in the economic realm!

Multiple Choice

In the loanable funds framework, who supplies funds?

Explanation:
In the loanable funds framework, funds come from savers who choose to lend out their excess income. These lenders supply the loanable funds, and their willingness to save increases when the real interest rate rises, which is why the supply curve slopes upward in this model. Borrowers demand funds to finance investment, and the interest rate adjusts to balance saving and investment. While the central bank or the government can influence overall liquidity and policy, the source of the funds in the basic picture is the lenders—savable funds provided by savers.

In the loanable funds framework, funds come from savers who choose to lend out their excess income. These lenders supply the loanable funds, and their willingness to save increases when the real interest rate rises, which is why the supply curve slopes upward in this model. Borrowers demand funds to finance investment, and the interest rate adjusts to balance saving and investment. While the central bank or the government can influence overall liquidity and policy, the source of the funds in the basic picture is the lenders—savable funds provided by savers.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy