BA 213 Study Guide - Loanable Funds, Aggregate Supply, Aggregate Demand

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26 May 2022
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Factors that cause the supply and demand curves for loanable funds to shift. The funds which is provided to the financial markets by net suppliers of funds it"s called loanable funds. The total net demand for funds by fund participants its called demand for loanable funds. The loanable funds framework put financial market player suppliers and demanders of funds into the following categories; consumers, businesses, governments, and foreign participants. In general, as interest rate rises, the quantity of loanable funds supplied increases while the demand for the loanable funds decreases as the interest rate rises. The sum of the quantity funds supplied by the separate fund supplying sectors (e. g. , households, businesses, governments, foreign agents) its called aggregate supply of funds. Similarly, the aggregate demand for loanable funds is the sum of the quantity demanded by the separate fund demanding sectors. Absolute dollar value available for investment purposes increases as wealth of financial market participants increases: risk.

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