ECONOMICS
GDP
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The willingness of households and governments to save.
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The number of financial intermediaries available.
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Changes in the interest rate, which causes business firms to undertake more or less profitable investment projects.
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The quantity of stocks and bonds issued by business firms.
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Detailed explanation-1: -One of the main determinants of the supply of loanable funds is the interest rate. The interest rate provides the return individuals receive for loaning their money to borrowers.
Detailed explanation-2: -The supply of loanable funds is based on savings. The demand for loanable funds is based on borrowing. The interaction between the supply of savings and the demand for loans determines the real interest rate and how much is loaned out.
Detailed explanation-3: -The interest rate is determined in the market for loanable funds. The demand curve for loanable funds has a negative slope; the supply curve has a positive slope. Changes in the demand for capital affect the loanable funds market, and changes in the loanable funds market affect the quantity of capital demanded.
Detailed explanation-4: -Factors that cause shifts in the loanable funds’ demand curve includes: changes in perceived business opportunities, government borrowings, etc. Factors that cause the supply of loanable funds to shift include private savings behaviour, and capital flows.
Detailed explanation-5: -In economics, the loanable funds doctrine is a theory of the market interest rate. According to this approach, the interest rate is determined by the demand for and supply of loanable funds. The term loanable funds includes all forms of credit, such as loans, bonds, or savings deposits.