Loanable Funds Market

I.            High interest rates are good for borrowers, but not lenders.

II.            The LFM s the private sector supply and demand of loans

III.            This market brings together those who want to lend money and those who want to borrow and shows the effect on Real Interest Rate.

IV.            Demand- Inverse relationship between real interest rate and quantity loans demanded

V.            Supply- Direct relationship

VI.            The supply is not vertical