Principles of Macroeconomics / Unit 18 MAC 1713 short lesson, about 20 seconds
Model Five: Loanable Funds
Captions available
The idea
The supply of saving against the demand for borrowing, with the real interest rate as the price. More saving lowers the rate; more borrowing raises it. Government borrowing enters on the demand side.
In practice
Unit two built it and unit fifteen used it for crowding out.
Where people slip
This market and the money market both produce an interest rate, and they answer different questions.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Builds on
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