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Explain the relationship between saving and the supply of loanable funds?

Explain the relationship between saving and the supply of loanable funds?

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Answer #1

There is a positive relationships between saving and supply of loanable fund. This is because people save and purchase government bonds, shares, debentures and save money in bank.

This money is used by the companies and government in the form of loanable fund. So with the increase in the savings, supply of loanable fund also increase.

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