Loanable Funds Market: The loanable funds market is where borrowers (such as businesses) seek funds from lenders (such as households or financial institutions) through loans or investments.
Interest Rates: Interest rates represent the cost of borrowing money or the return on lending money. They are determined by supply and demand in the loanable funds market.
Government Spending: Government spending refers to expenditures made by the government on goods, services, infrastructure projects, or transfer payments such as welfare programs.