What are the various sources of demand and supply in the market for loanable funds?
The supply of loanable funds comes from anyone who has saved money and wants to lend it out. For example, if a household wants to save its money in the bond market, it would purchase bonds in the market or perhaps from a particular firm.
The demand for loanable funds comes from households and firms who want to borrow money. This might include people who want to borrow to buy a house or condo. Businesses borrow money to buy equipment or to build or renovate factories and office space. In each case, investment is the source of the demand for loanable funds.
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Recessions in the U.S. economy show up in economic data as periods of
A) declining prices. B) rising interest rates. C) slower growth or actual decline in nominal GDP. D) slower growth or actual decline in real GDP.
When there is a resource for which property rights are not well defined and there is a difference between private costs and social costs, then all but which of the following is a way to close the difference?
A) the free market system B) taxation C) subsidization D) regulation