4.7: The Loanable Funds Market

Question 1

The loanable funds market

Answer 1

Shows the supply and demand of loans and shows the equilibrium real interest rate

Question 2

Private Savings

Answer 2

The amount that households save instead of consume

Question 3

Public Savings

Answer 3

The amount the government saves instead of spends

Question 4

National Savings

Answer 4

Public + private savings

Question 5

Foreign Investment

Answer 5

Foreigners also lend so the supply is affected

Question 6

Capital Inflow

Answer 6

The amount of money entering the country

Question 7

Capital Outflow

Answer 7

The amount of money leaving the country

Question 8

Private investment

Answer 8

Borrowing by businesses and consumers

Question 9

Government Borrowing

Answer 9

Deficit spending when gov spending is greater than tax revenue

Question 10

Demand Shifters

Answer 10

1. Changes in borrowing by consumers
2. Changes in investment spending
3. Deficit Spending

Question 11

Supply Shifters

Answer 11

1. Changes in private savings
2. Changes in public savings
3. Changes in foreign investment