Loanable Funds
Definition
Loanable funds refer to the supply of money available for lending from households, businesses, and governments in an economy.
Analogy
Think of loanable funds as a pool of money that is available for borrowing. Just like people can dip into this pool to borrow money for various purposes like buying homes or starting businesses, loanable funds represent the total amount of money that can be borrowed within an economy.
Related terms
Interest Rates: The cost of borrowing or the return on lending money.
Investment: Spending by firms on capital goods such as machinery and equipment.
Savings: Income not consumed and set aside for future use or investment.
"Loanable Funds" appears in:
Study guides (1)
Practice Questions (1)
- What factor could decrease the demand for loanable funds?
Resources
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