Use the following to answer questions:
-(Figure: International Capital Flows) Refer to Figure: International Capital Flows. At an interest rate of 4%, the quantity of loanable funds supplied by U.S. lenders is _____ the quantity of loanable funds demanded by U.S. borrowers.

Question

Use the following to answer questions: 
-(Figure: International Capital Flows) Refer to Figure: International Capital Flows. At an interest rate of 4%, the quantity of loanable funds supplied by U.S. lenders is _____ the quantity of loanable funds demanded by U.S. borrowers.

Quizplus · Accepted Answer

At an interest rate of 4%, the quantity of loanable funds supplied is less than the quantity of loanable funds demanded, as shown by the intersection of the supply curve and the demand curve. This creates an excess demand for loanable funds, leading to an increase in the interest rate.

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