Answer to Question #149432 in Macroeconomics for qianhe

Question

What determines the demand for loanable funds?

What affect the demand curve of loanable funds and how does it change?

Answer 1

The demand for loanable funds is based on borrowing.The lower the interest rate, the less expensive it is to borrow.

Interest rate affects the demand curve for loanable funds. The demand curve has a negative slope.

Changes in the demand for capital affects the loanable funds market. The higher the interest rate the lower the demand and when the interest rate is low, the demand for loanable funds increases