Draw the graph · Macro · Loanable funds market

An investment tax credit

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 shifts right. Supply of loanable funds stays put.

Firms borrow to finance investment. The credit makes more projects worth doing, so firms want to borrow more at every real interest rate. The demand for loanable funds shifts right. Supply is unchanged. The higher interest rate draws more saving along the supply curve.

The real interest rate rises and more funds are borrowed.

Common mistake. Students sometimes shift supply right because 'the government is giving money.' The credit is paid to investors, and it changes how much they want to borrow. That is demand.

More loanable funds market prompts

The government runs a deficit Households save more Foreign savers lend here The government runs a surplus Firms turn pessimistic A consumption boom cuts saving

Go deeper

Lesson: Limits of Fiscal Policy

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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