Sign In | Subscribe
Start learning today, and be successful in your academic & professional career. Start Today!
Loading video...
This is a quick preview of the lesson. For full access, please Log In or Sign up.
For more information, please see full course syllabus of AP Macroeconomics
  • Discussion

  • Study Guides

  • Download Lecture Slides

  • Table of Contents

  • Related Books

Bookmark and Share
Lecture Comments (23)

2 answers

Last reply by: Sarmad Khokhar
Sat Oct 22, 2016 9:57 AM

Post by Sarmad Khokhar on October 22 at 09:01:53 AM

At 3;46 your graph for loanable funds market is wrong as on y-axis it should be nominal interest rate . Thanks

1 answer

Last reply by: Professor Jibin Park
Sat Mar 21, 2015 5:20 PM

Post by Zakaria Jibrin on March 20, 2015

I found this lecture to be very clarifying
thank you!

1 answer

Last reply by: Professor Jibin Park
Sat Mar 21, 2015 5:20 PM

Post by kevin wang on March 18, 2015

Very helpful lecture Professor Park!

1 answer

Last reply by: Professor Jibin Park
Fri Mar 13, 2015 10:52 AM

Post by Kaitlyn Eng on March 13, 2015

Will the supply or demand of the loanable funds graph always go back to its original position in the long run such as in Example 2?

1 answer

Last reply by: Professor Jibin Park
Fri Mar 13, 2015 10:52 AM

Post by Caroline Torres on March 13, 2015

At first I didn't really understand the relationship between the money market and the loanable funds market, but the examples really helped me visualize it. Good lecture!

1 answer

Last reply by: Professor Jibin Park
Fri Mar 13, 2015 10:53 AM

Post by Hillary Hermawan on March 12, 2015

Makes a lot more sense now, and much more easy to follow than the textbook. Thank you!

1 answer

Last reply by: Professor Jibin Park
Fri Mar 13, 2015 10:55 AM

Post by Kimberly Wong on March 12, 2015

Thank you. The concept of loanable funds has been greatly clarified. The side by side graphs with the money market was helpful.

1 answer

Last reply by: Professor Jibin Park
Fri Mar 13, 2015 10:55 AM

Post by Eric Liu on March 12, 2015

Great lecture Professor Park!

1 answer

Last reply by: Professor Jibin Park
Thu Mar 12, 2015 6:02 PM

Post by Rodrigo Rodarte on March 12, 2015

At 14:54 for the fisher effect does the sentence actually go "the expected NOMINAL interest rate is unaffected..." instead of "the expected REAL interest rate is unaffected..."?

0 answers

Post by Thadeus McNamara on February 20, 2015

Just explain the last bullet please. I fully understand the other bullets.

0 answers

Post by Thadeus McNamara on February 20, 2015

I am actually most confused by the very last bullet. I understand the 2 before it a little better now.

1 answer

Last reply by: Professor Jibin Park
Fri Feb 20, 2015 2:45 PM

Post by Thadeus McNamara on February 20, 2015

@18:30, on the slide labeled, Interest Rate In The Long Run, I don't understand the last 3 bullets. Especially the "As a result..." one and the "The supply and demand for loanable..." bullets. Can you please explain the 3 bullets.

The Market for Loanable Funds

  • The loanable funds market matches savers and investors
  • Changes in perceived business opportunities and changes in government borrowing will shift the demand for loanable funds
  • If the government runs a budget deficit, demand increases, real interest rates increases and business invest less because of the “crowding-out” effect
  • Changes in private savings behavior and changes in capital inflows will shift the supply for loanable funds
  • Inflation tends to help borrowers and hurt savers
  • Real interest rate = Nominal interest rate – inflation rate
  • According to the Fisher effect, the expected real interest rate is unaffected by the change in expected future inflation as borrowers and lenders base decisions on the expected real interest rate and not the nominal

The Market for Loanable Funds

Lecture Slides are screen-captured images of important points in the lecture. Students can download and print out these lecture slide images to do practice problems as well as take notes while watching the lecture.

  • Intro 0:00
  • Lesson Overview 0:05
  • Loanable Funds Market 0:57
    • Loanable Funds Markets
    • Savers
    • Borrowers
    • Equilibrium in the Loanable Funds Market
  • Equilibrium in Loanable Funds Market 3:45
  • Shifts of Demand for Loanable Funds 5:47
    • Changes in Perceived Business Opportunities
    • Changes In the Government's Borrowing
  • Shifts of the Supply of Loanable Funds 8:35
    • Changes in Private Savings Behavior
    • Changes in Capital Inflows
  • Inflation and Interest Rates 11:07
    • Real Interest Rate
    • A Good Hedge Against Inflation
    • Fisher Effect
  • Increase in Supply of Loanable Funds 15:38
  • Interest Rate in the Short Run 16:57
    • Fall in Interest Rates
    • Increase in the Money Market
    • Short Run
  • Interest Rate in the Long Run 18:16
    • Increase in Money Supply in Long Run
    • Supply of Loanable Funds
    • Supply and Demand for Loanable Funds Determines the Interest Rate
  • Example 1 20:20
  • Example 2 23:40
  • Example 3 28:18
  • Example 4 29:29