Question

Loanable funds refers to A. only those funds loaned from one bank to another. B. all those funds changing hands between lenders and borrowers in the bond market. C. only those funds loaned to banks by the Federal Reserve. D. only those funds loaned by banks to private individuals.

Answer 1

Answer:

B) all those funds changing hands between lenders and borrowers in the  market.

*The word "bond" shouldn't be there. But all the other options are completely wrong.

Explanation:

Loanable funds refers to the total amount of money saved by households in an economy and available for other people or businesses to borrow. Household's money can be either consumed (spent) or saved, and their proportion is calculated by the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) = 1 - MPC

Answer 2

Answer:

The correct answer is B. all those funds changing hands between lenders and borrowers in the bond market.

Explanation:

Loanable funds is a market where all the funds accumulated by savers are found, and which are used to grant credits to other interested people in order to meet some investment or spending need. These funds work in the same way as a bank, and they generate returns on your loan, but usually at a lower rate.