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Principles of Macroeconomics / Unit 2   MAC 0132 short lesson, about 20 seconds

The Loanable Funds Market

Captions available

The idea

In the loanable funds market, savers supply and borrowers demand, and the interest rate is the price. A higher rate raises the quantity supplied and lowers the quantity demanded.

In practice

Households, firms, governments and foreigners appear on both sides.

Where people slip

The exam calls this the loanable funds market; the anchor calls it the market for financial capital. They are the same diagram.

Your place on the trail

Every lesson rests on earlier ones and opens later ones. Tap any to jump.

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