Question

Economists use _____ as a model to explain how savers and borrowers come together to determine the equilibrium rate of interest. A. the financial system B. the money market C. aggregate demand and aggregate supply D. the market for loanable funds

Answer 1

Answer: THE MARKET FOR LOANABLE FUNDS.

Explanation: The market for loanable funds refers to the description of how borrowing happens.

In economics, loanable funds doctrine is a theory of the market interest rate. Economist use this model to explain how savers and borrowers come together to determine the equilibrium rate of interest

Answer 2

D. the market for loanable funds.

Step-by-step explanation:

A loanable fund is a theory of market interest rate. Loanable funds are the sum of total money which the people have decided to save and lend to borrowers. This theory determines the equilibrium rate of interest by savers and borrowers. This theory defines that interest rate is determined by demand and supply of loanable funds. The demand for loanable fund is downward sloping which indicates that investors respond to lower interest rates by increasing the demand of loanable funds.