Two Views of Interest Rate Determination
Two Views of Interest Rate Determination
Loanable funds theory explains the real interest rate through the market for saving and borrowing. The equilibrium rate is where the supply of saving equals the demand for investment funds.
Step-by-step lessons on CIE Intl A Level Economics 9.4.8 interest rate determination: loanable funds theory and Keynesian theory. Each one builds up to exam-style questions.