The quantity of loanable funds demanded represents how much individuals and businesses desire to borrow at various interest rates in order to invest in productive activities like starting new ventures or expanding existing ones.
Related terms
Investment: Investment refers to spending on capital goods such as machinery, equipment, and buildings that enhance productivity and generate future income.
Crowding out effect: This effect occurs when increased government borrowing reduces private sector borrowing by raising interest rates.
Loanable funds market equilibrium: This refers to the point where supply and demand for loanable funds intersect, indicating an equilibrium interest rate and quantity of loanable funds.
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