Question

In the market for loanable funds, savers are shown?

Answer 1

The notion of loanable funds market is a method by which savers ( households and individuals) supply funds to borrowers (typically firm). Households are primary suppliers of loanable funds and firms are borrowers of loanable funds.

when these markets function properly, firms get the funds necessary for producers and savers are paid for lending.

The demand curve for loanable funds is downward sloping as at a lower rate of interest, firms can borrow money more cheaply and quantity of borrowing increases.

The supply curve is upward sloping because at a higher rate of interest, higher returns are incurred so people are willing to save more.