Money & Finance · intermediate
What moves on the Loanable Funds Market diagram
Capital inflows add to funds supply, pushing realrealAdjusted for inflation, measured in actual purchasing power. rates down and quantity of investment up.
Start at equilibriumequilibriumThe point where opposing forces balance, quantity supplied equals quantity demanded, so there's no pressure for price to change..
Foreign savings pour in seeking returns, funds supply shifts right.
Rates fall and investment expands. This is the 2000s 'global savings glut' story behind cheap credit.
Examiners ask this as: savings glut, foreign capital inflow, low rates flood.
Other scenarios on Loanable Funds Market