Question

is the source of the supply of loanable funds. as the interest rate falls, the quantity of loanable funds supplied . suppose the interest rate is 5.5%. based on the previous graph, the quantity of loanable funds supplied is than the quantity of loans demanded, resulting in a of loanable funds. this would encourage lenders to the interest rates they charge, thereby the quantity of loanable funds supplied and the quantity of loanable funds demanded, moving the market toward the equilibrium interest rate of

Answer 1

The question is about the market for loanable funds and interest rates. If the interest rate is lower than the equilibrium level, there will be a surplus of loanable funds. Lenders will lower interest rates to attract more borrowers and move the market towards equilibrium.

Step-by-step explanation:

The subject of this question is economics, specifically the market for loanable funds and interest rates.

In the given scenario, if the interest rate is 5.5%, it is lower than the equilibrium level. As a result, the quantity of loanable funds supplied will be greater than the quantity of loans demanded, creating a surplus or excess supply in the market.

This surplus of loanable funds would encourage lenders to lower the interest rates they charge in order to attract more borrowers. This adjustment would increase the quantity of loanable funds demanded and move the market towards the equilibrium interest rate.

Answer 2

If the interest rate is above the equilibrium level, there will be an excess supply of loanable funds. Lenders will lower interest rates to attract more borrowers and move towards the equilibrium interest rate.

Step-by-step explanation:

According to the provided information, if the interest rate is above the equilibrium level, there will be an excess supply, or surplus, of loanable funds. In this situation, lenders will lower the interest rates they charge to attract more borrowers and move the market towards the equilibrium interest rate. This will result in an increase in the quantity of loanable funds supplied and a decrease in the quantity of loanable funds demanded, eventually leading to the market reaching the equilibrium interest rate.