The horizontal axis shows the quantity of money loaned or borrowed with credit cards; the vertical axis shows the rate of return, measured here by the interest rate. The demand curve D for borrowing financial capital meets the supply curve S for lending it at equilibrium E: an interest rate of 15% and $600 billion loaned and borrowed. There the quantity demanded and the quantity supplied are equal.
At an above-equilibrium interest rate like 21%, the quantity of financial capital supplied rises to $750 billion but the quantity demanded falls to $480 billion: an excess supply, or surplus. At a below-equilibrium rate like 13%, the quantity demanded rises to $700 billion but the quantity supplied falls to $510 billion: excess demand, or a shortage.
Move the two explored interest rates to see how the surplus and shortage change. Savers who supply financial capital expect a rate of return; borrowers who demand it expect to pay one.
| Interest rate | Quantity demanded (borrowing, $ billions) | Quantity supplied (lending, $ billions) |
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