Use the following to answer questions:
-(Figure: The Loanable Funds Model in the U.S. Market) Refer to Figure: The Loanable Funds Model in the U.S. Market. If the actual interest rate is higher than 4% in the U.S. market, then the quantity supplied of loanable funds will be _____ the quantity of loanable funds demanded.

Question

Use the following to answer questions: 
-(Figure: The Loanable Funds Model in the U.S. Market) Refer to Figure: The Loanable Funds Model in the U.S. Market. If the actual interest rate is higher than 4% in the U.S. market, then the quantity supplied of loanable funds will be _____ the quantity of loanable funds demanded.

Quizplus · Accepted Answer

In the loanable funds model, if the actual interest rate is higher than the equilibrium rate (in this case, 4%), it means that the price of borrowing is more expensive, leading to a decrease in the quantity of loanable funds demanded and an increase in the quantity supplied. Therefore, the quantity supplied will be greater than the quantity demanded.

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