At an interest rate of 3 percent in this market, there is a ______ of loanable funds of ______ million.

Question

Quizplus · Accepted Answer

A shortage occurs when the quantity demanded exceeds the quantity supplied. In this case, the interest rate of 3 percent is relatively low, so many people and businesses may want to borrow money. However, since there is only a supply of $150 million of loanable funds, there will be a shortage (quantity demanded > quantity supplied) and some borrowers will not be able to obtain the funds they need.

At an Interest Rate of 3 Percent in This Market