Loanable Funds / Private Savings (Graph)

Loanable Funds Market  

• The private component of the money market
• brings private lenders and borrowers together
• matches money of private savers with borrowers for investment or consumption

Savers = Supply line

• willingness of society to save
• savers supply loanable funds
• buying bonds
• savings accounts

Borrowers = demand line

• firms that sell bonds are demanding money
• can also borrow from savings accounts (bank loans)
• firms
• households