ECON 248 8.3 The Market For Loanable Funds

A market where all savers go to deposit their savings, and all borrowers got to to receive loans.

Market For Loanable Funds

The total amount of income people have chosen to save and lend out.

Loanable Funds

The () of loanable funds comes from () who have some extra income they want to save and lend out.

Supply, Savers

The () for loanable funds comes from ()(households and firms) who wish to borrow to make ().

Demand, Borrowers, Investment

The supply and demand curve for loanable funds and interest rate has () on the x-axis and () on the y-axis.

Loanable Funds, Interest Rate

When interest rate (), supply of loanable funds rises while the demand for it decreases and vice-versa.

Increases

A () saving rate leads to a higher () and a better () overall.

Higher, GDP, Standard Of Living

A way to promote saving is to ensure that saved income and interest is not ().

Taxed

Less taxing on saving would increase the quantity of loanable funds () and would cause interest rate to ().

Supplied, Decrease

An () gives a tax advantage to any firm building a new factory or buying a new piece of equipment.

Investment Tax Credit

Investment tax credit would cause an increase in loanable funds () and interest rate to ().

Demanded, Increase

When a government spends more than it receives, it’s called a (), with the opposite being called a (). If it spends the exact same amount as revenue earned, that is called a ().

Budget Deficit, Budget Surplus, Balanced Budget

The total past budget deficits minus the total past budget surpluses is called ().

Government Debt

A budget deficit decreases (), and () interest rate, while a budget surplus does the opposite.

Loanable Funds Supplied, Increases

The fall in investment because of government borrowing is called ().

Crowding Out

Increased borrowing from () shifts the demand curve.

Private Investors

Continuous budget deficits can push an economy into a () where they only cause less economic growth, which means even lower saving and more spending.

Vicious Cycle

The difference between the value of financial liabilities and financial assets of a government.

Government Net Debt

A method to gauge government debt is to compare it to () debt.

Other Countries

A way to gauge government debt is to compare () of the government to other Countries.

Default Risk