Money & Finance · intro
What moves on the Loanable Funds Market diagram
Better expected returns shift investment demand right, raising both the realrealAdjusted for inflation, measured in actual purchasing power. rate and funds borrowed.
Start at equilibriumequilibriumThe point where opposing forces balance, quantity supplied equals quantity demanded, so there's no pressure for price to change..
A technology wave convinces firms every project will pay, investment demand shifts right.
Rates AND investment rise together: demand-driven rate rises signal optimism, not scarcity.
Examiners ask this as: business confidence investment, animal spirits, tech boom borrowing.
Other scenarios on Loanable Funds Market