AP®︎ Macroeconomics: Topic 4.7 Flashcards

Master key terms and definitions for Topic 4.7 of AP Macroeconomics – The Loanable Funds Market to help you prep for quizzes and the AP exam.

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Term

Loanable Funds Market

Definition

The market where savers supply funds and borrowers demand funds, determining the real interest rate.

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Loanable Funds Market
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The market where savers supply funds and borrowers demand funds, determining the real interest rate.

MKT-4.AMKT-4.A.1
Demand for Loanable Funds
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The amount borrowers want to borrow at each real interest rate, with an inverse relationship.

MKT-4.AMKT-4.A.2
Supply of Loanable Funds
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The amount savers and lenders provide at each real interest rate, with a positive relationship.

MKT-4.AMKT-4.A.3
Equilibrium in the Loanable Funds Market
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The point where quantity of funds demanded equals quantity supplied at the market real interest rate.

MKT-4.CMKT-4.C.1
Shortage and Surplus in the Loanable Funds Market
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Below equilibrium, quantity demanded exceeds quantity supplied; above equilibrium, quantity supplied exceeds quantity demanded.

MKT-4.DMKT-4.D.1
Effects of a Demand Shift in the Loanable Funds Market
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Demand right raises real interest rates and quantity; demand left lowers real interest rates and quantity.

MKT-4.EMKT-4.E.2
Effects of a Supply Shift in the Loanable Funds Market
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Supply right lowers real interest rates and raises quantity; supply left raises real interest rates and lowers quantity.

MKT-4.EMKT-4.E.2
National Saving
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The sum of private and public saving; in open economies, investment equals saving plus net capital inflow.

MKT-4.B
Determinants of Loanable Funds Demand and Supply
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Government borrowing, investment incentives, and saving behavior shift demand or supply of loanable funds.

MKT-4.E