Does the market for loanable funds determine the interest rate or does the government do that?

Answer 1

There is a game that is played between the Federal Reserve and the Market (game in the Game Theory sense). The Fed has the power to increase or decrease short term interest rates temporarily. The market has more power.

The Target Federal Funds rate is set by the Federal Reserve -- but the market usually sends them a strong signal telling them when to change rates.

The market doesn't always go along with the Fed, and the Fed doesn't always go along with the market. In the end -- the market determines the rates. But they take Federal Reserve actions into account.

Answer 2

The government does not set private loan rates.

Answer 3

A. improve in government. spending will improve call for for loanable money inflicting improve in costs of interest, which in turn reason inner optimal investment (I), inner optimal intake(C) and information superhighway export(NX) to fall B. decrease returned in spending on autos and gasoline will advise that customers are saving greater effective and subsequently supply of loanable money improve inflicting costs of interest to fall, which in turn reason C, I and NX to upward push C. paying for smaller living house potential customers %. to spend greater effective and save much less; subsequently supply of loanable money will fall inflicting costs of interest to upward push

Answer 4

the federal reserve does that.