QUESTION 3 You invest $1.000 in a bank term deposit today 0 but are planning md your money ane the ban Te an interest rate of 6.50% per annum How long willtke you atataRound your anrtod CA500 years O14.90 years OCB49 years O 11.52 years OLB55years hack e

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.