What is the equilibrium condition in the loanable funds market?
A) S + G = IP - T
B) S = IP + T - G
C) S + IP = G - T
D) S - T = IP + G
E) S = IP + G - T

Question

Quizplus · Accepted Answer

The equilibrium condition in the loanable funds market is represented by the equation S = IP + G - T, where S is saving, IP is investment spending, G is government spending, and T is taxes. This equation shows that at equilibrium, saving equals investment spending plus net government spending (government spending minus taxes). Choice E is the only option that correctly represents this equation.

What Is the Equilibrium Condition in the Loanable Funds Market