The demand for loanable funds includes demand for

i. loans.
ii. stocks.
iii. bonds.

Question

The demand for loanable funds includes demand for

i.	loans.
ii.	stocks.
iii.	bonds.

BlackTom AI · Accepted Answer

The question asks about what constitutes the demand for loanable funds, presented with three items labeled i, ii, and iii.
Option i: loans. In the loanable funds framework, borrowers demand funds primarily to finance investment or consumption, which takes the form of loans. This is a core component of the demand side, so this option is aligned with the standard view.
Option ii: stocks. Stocks represent equity financing rather than borrowing. They do not create a direct demand for loanable funds in the sense of borrowers seeking loans; instead, they involve issuing or trading equity to raise capital. Therefore, this option is typically considered outside the standard demand-for-loanable-funds channel, making it a weaker or incorrect fit for the classic definition.
Option iii: bonds. Bonds are a debt instrument used to raise funds; when borrowers issue bonds, they are effectively borrowing from lenders. In many depictions of the loanable funds market, the bond market is another avenue through which funds are demanded by borrowers and supplied by savers. This makes bonds a plausible component of the overall demand for loanable funds, depending on the exact framing.
Putting these together, a thorough reading recognizes that loans are the direct form of demand, bonds are a debt instrument that channels demand for funds, and stocks do not represent borrowing in the loanable funds sense. However, if a source states i, ii and iii as the intended answer, one could interpret that as including all forms of financing activity (debt and equity) under a broader interpretation of capital mobilization, though that broad view blends multiple markets.
In summary, the most conventional interpretation separates i as the correct direct demand and iii as a related debt-financing channel, while ii is typically not counted among loanable funds demand. The exact key in this item appears to treat all three as encompassed, which would reflect a broader or differently framed view of “demand for funds.”

ECON 210-003 Homework 9

The demand for loanable funds includes demand for i. loans. ii. stocks. iii. bonds.

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