The demand for loanable funds is the relationship between loanable funds and the other things remaining the same.

Question

Quizplus · Accepted Answer

The demand for loanable funds is largely influenced by the real interest rate, as borrowers will demand less funding if the real interest rate is high (as it increases the cost of borrowing), and more funding if it is low. The inflation rate and price level may indirectly impact the demand for loanable funds by affecting individuals' incomes and overall economic conditions, but they are not direct drivers of loan demand. The nominal interest rate is also not a direct driver of loan demand as it does not account for inflation.

The Demand for Loanable Funds Is the Relationship Between Loanable