Supply of loanable funds : Interest rates :: Demand for loanable funds : ?

The supply of loanable funds is related to interest rates because when interest rates are high, more people and institutions are willing to save and lend their money, increasing the supply. Similarly, the demand for loanable funds is linked to interest rates as well; when interest rates are low, borrowing becomes cheaper, encouraging more people and businesses to take out loans. This means that as interest rates decrease, the demand for loanable funds increases because borrowers can afford to pay back loans more easily. For example, if a small business sees that interest rates drop, it might decide to borrow money to expand, leading to higher demand for loans. So, just as higher interest rates can boost the supply of loans, lower interest rates can increase the demand for loans.