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AP® Macroeconomics

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Loanable Funds vs. Money Supply

APMACR-KLENL4

How does the loanable funds market DIFFER from Money Supply?

A

Loanable funds supply curve is vertical but money supply is unit elastic and slopes up to the right.

B

Loanable funds demand curve is horizontal and Money Supply is not.

C

Loanable funds refers to the supply and demand for funds available for lending and borrowing, while money supply is total money available for all purposes.

D

Interest rates in the loanable funds market are much lower than in the Money Supply market

E

Money banks lend to each other are what make up the loanable funds market, while the money supply consists of loans the U.S. government has made to finance debt.