Events in the loanable funds market can also affect the quantity of capital firms will hold Suppose, for example, that consumers decide to increase current consumption and thus to supply fewer funds to the loanable funds market at any interest rate This change in consumer preferences shifts the supply curve for loanable funds in Panel (a) of Figure 13.5 "A Change in the Loanable Funds Market and the Quantity of Capital Demanded" from S1 to S2 and raises the interest rate to r2 If there is no change in the demand for capital D1, the quantity of capital firms demand falls to K2 in Panel (b) Figure 13.5 A Change in the Loanable Funds Market and the Quantity of Capital Demanded A change that begins in the loanable funds market can affect the quantity of capital firms demand Here, a decrease in consumer saving causes a shift in the supply of loanable funds fromS1 to S2 in Panel (a) Assuming there is no change in the demand for capital, the quantity of capital demanded falls from K1 to K2 in Panel (b) Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 705