4/3/17
- Loanable funds market
- Private sector supply and demand of loans
- Brings together the lenders and borrowers
- Shows real interest rate
- When demand, it is an inverse relationship between real interest rate and quantity loans demanded
- When supply, it is direct relationship between real interest rate in quantity loans demanded
- Not the same as Money Market
- Federal funds rate – interest rate that banks charge one another for overnight loans
- Prime rate – interest rate that banks charge their most credit worthy customers
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