The demand curve downward sloping shows lower interest rates will allow the borrowers to demand more funds for investment while the supply curve upward sloping shows the higher interest rates that lenders are willing to lend more funds to investors.
What is a loanable funds model?
This refers to an economic model that make use of both supply & demand to illustrate how an interest rate is determined by the interaction between savers who supply money and investors who borrow money.
Most time, the demand curve of the loanable funds model moves downward sloping to show that at lower interest rates borrowers will demand more funds for investment while the supply curve for loanable funds will move upward sloping to shows that at higher interest rates lenders are willing to lend more funds to investors.
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