Draw the graph · Macro · Loanable funds market

Capital flight

Ddemand for loanable funds

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Ssupply of loanable funds

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Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put. Make each shift clear enough that a reader could see it.

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Demand for loanable funds stays put. Supply of loanable funds shifts left.

Funds that leave the country are no longer available to lend here. The supply of loanable funds shifts left at every real interest rate. Demand is unchanged. The higher interest rate moves borrowers up along their demand curve.

The real interest rate rises and fewer funds are borrowed.

Common mistake. A common error is to shift demand left because 'investors are leaving.' The investors who left were lenders. Their exit shrinks supply, and borrowers now pay more.

More loanable funds market prompts

The government runs a deficit Households save more An investment tax credit Foreign savers lend here The government runs a surplus Firms turn pessimistic

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Lesson: Balance of Payments

Every prompt here is one shift. The course chains them: a lesson on why the curve moves, a graded drawing, and spaced review that brings back the shifts you get wrong.

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