LOANABLE FUNDS MARKET

The loanable funds market is where savers and borrowers exchange funds at the real interest rate (r%)

• demand for loanable funds, or borrowing, comes from households, firms, government, and the foreign sector. The demand for loanable funds is, the supply of bonds
• supply of loanable funds, or savings, comes from households, firms, government, and the foreign sector the supply of loanable funds is also the demand for bonds

Demand for loanable funds = borrowing (supplying bonds) , changes in the demand for loanable funds occur when there is:

• More borrowing = more demand for loanable funds 
• ex: government deficit spending = more borrowing = more demand for loanable funds, therefore r% increases
• Less borrowing = less demand for loanable funds 
• ex: less investment demand = less borrowing = less demand for loanable funds, r% decreases

supply of loanable funds = saving (demand for bonds), changes in the supply of loanable funds occur when:

• More saving = more supply of loanable funds 
• ex: government budget surplus = more saving = more supply of loanable funds, and r% decreases
• Less saving = less supply of loanable funds
• ex: decrease in consumers' MPS = less saving = less supply of loanable funds, and r% increases

If you still don't understand, here's some vids 2 help :) :

Loanable funds market:https://www.youtube.com/watch?v=FdtBj1juEQs

National savings and investment:

https://www.youtube.com/watch?v=fToDs5nd_rE