Discuss the factors affecting
What are loanable funds? Discuss the factors affecting (a) the demand for loanable funds, (b) the supply of loanable funds
Loanable funds are essentially the sum total of the money that people and businesses have to decide to save and later on to lend out to borrowers, as an investment instead of using it for personal consumption. The supply of loanable funds comes from businesses and
government organizations, which decided to save money and spend it on investments and one way to make an investment is to lend money to a borrower and put it out with a rate of interest. On the other hand, the demand for loanable funds comes from the desire to finance investments. What affect the demand is that it becomes more expensive to borrow some money, which leads the number of funds demanded to decrease. When the interest rate for funds reaches the equilibrium point, the demand for loanable funds equals the supply.
Save time and excel in your essays and homework. Hire an essay writer for the best price for the top-notch grade you deserve.