Financial
The Supply of Loanable funds is based on What?
On Savings!!!!!
What type of relationship is there between Rates and Quantity demanded for Loans?
Will you demand loans when rates are High?
Inverse....
What kind of Interest is on the Loanable Funds Market?
Real Interest
Who Borrows Money?
Individuals
Firms
Government---to Pay bill when we have a deficit
What makes lending Possible?
and Foreign Lending
What shifts the demand for loans?
Borrowers
If the Nominal Rate is 5% and Inflation is 2%, what is the Real Interest Rate?
5-2 = 3%
Who demands loans?
Borrowers
What shifts the demand for Money (Cash)
rising prices
rising GDP
more transactions
Who is interested in Real Interest Rates?
Borrowers and Investors----Lenders
Who supplies Loans?
Savers!!!!!
What shifts the Supply of Loanable Funds
Savers!!!!
If the Nominal Rate is 5% and Inflation is 4%, what is the Real Interest Rate?
5-4 = 1%----Ouch!!!!
What kind of interest is on the Money Market
Nominal Interest ---- (Real + Inflation)
What shifts the Supply of Money?
The Federal Reserve!!!!!!!