Loanable funds

Loanable funds market:
-the market where savers and borrowers exchange funds (Qlf) at the real rate of interest (r%)
-the demand for loanable funds, or borrowing comes from households, firms, government and the foreign sector. The demand for loanable funds is in fact the supply of bonds
-the supply of loanable funds, or savings comes from households, firms, government and the foreign sector. The supply of loanable funds is also the demand for bonds

Changes in demand for loanable funds
-remember that demand for loanable funds=borrowing (I.e. Supplying bonds)
-more borrowing = more demand for loanable funds (➡️)
-less borrowing = less demand for loanable funds (⬅️)
-ex: goverbment deficit spending = more borrowing = more demand for loanable funds .:Dlf ➡️ r%⬆️
-less investment demand = less borrowing = less demand for loanable finds .:Dlf⬅️r%⬇️

Changes in supply of loanable funds
-remember that supply of loanable funds = saving (I.e. Demand for bonds)
-more saving = more supply of loanable funds (➡️)
-less saving = less supply of loanable funds (⬅️)
-ex: government budget surplus = more saving = more supply of loanable finds .:Slf ➡️.:r%⬇️
-decrease in consumers' MPS = less saving = less supply of loanable funds .:Slf ⬅️ .:r%⬆️

Final thoughts on loanable funds
-when government does fiscal policy it will affect the loanable funds market
-changes in the real interest rate (r%) will affect Gross Private Investment

LINK FOR MORE INFO:
https://www.youtube.com/watch?v=hucfTz4sPfU&spfreload=10