Real interest rate: This term refers to the nominal (stated) interest rate adjusted for inflation, providing a measure of purchasing power gained or lost from lending or borrowing.
Loanable funds market: It represents the interaction between borrowers (demanders) who need loans and lenders (suppliers) who provide funds for loans.
Crowding out effect: When increased government borrowing leads to higher demand for loanable funds, causing interest rates to rise, reducing private investment spending.