Question

Determine if the given people are demanders, suppliers, or not involved in the market for loanable funds. a. Latisha wants to save up for a new laptop to use in her business, so she puts aside $100 a month in a bank account until she can save up for it. Latisha is in the market for loanable funds. b. Gerardo borrows $30,000 from his local bank for a new addition to his warehouse. Gerardo is in the market for loanable funds. c. Dana buys $1,200 of stocks every year in her IRA. Dana is in the market for loanable funds.

Answer 1

a. Latisha is a supplier in the market for loanable funds

The money that Latisha is depositing in the bank will be used to loan out money to another entity that needs it for investment. Latisha is therefore a supplier of funds.

b. Gerardo is a demander in the market for loanable funds.

Gerado needs loanable funds to increase the size of his warehouse. He is therefore a demander as he is seeking loans.

c. Dana is not involved in the market for loanable funds.

Stocks are not loanable funds. If Dana had borrowed money to buy stock she would be a demander but as she is not, she is not involved in this market.