Fill in the Blanks Module 29Online version The Loanable Funds Market - Fill-in-the-Blank (Part 1) by Zachary Foust 1 In the economy as a whole , savings always investment spending . In a economy , savings is equal to national savings . In an economy , savings is equal to national savings plus capital inflow . Savers and are matched up through markets governed by supply and . Financial markets channel the of households to businesses that want to borrow in order to purchase capital . The loanable funds market is a simplified model in which there is just one market that brings together those who want to lend money and those who want to money . Investors and savers care about the interest rate , which tells them the price paid for the use of money aside from the amount paid to keep up with inflation . The demand curve for loanable funds slopes . The rate of return is the earned on a project expressed as a percentage of its cost . A business will want a loan when the rate of return on its project is than or equal to the interest rate . The lower the interest rate , the larger the total quantity of loanable funds . By saving money today and earning on it , savers are rewarded with higher consumption in the future when the loan is repaid with interest . More people are will to make a when the interest rate is higher . The supply curve of loanable funds slopes . The equilibrium interest rate is the interest rate at which the quantity of loanable funds supplied the quantity of loanable funds demanded . In equilibrium , the quantity of funds that savers want to lend is to the quantity of funds that firms want to borrow .
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