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Loanable Funds Theory
An economic theory that describes the market interaction between borrowers and lenders, determining the equilibrium interest rate.
Equilibrium Interest Rate
The interest rate at which the demand for money to borrow is equal to the supply of money available to lend in the financial markets.
Loanable Funds
This refers to the resources or funds available for borrowing in the financial markets, used for investments and purchases.
Interest Rate
The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
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