Loanable Funds Theory – Global Effect of Excessive Borrowing – Money Market Funds


interest-rate-loanable-fundsThe Loanable Funds Theory

The loanable funds theory states that there is an inverse relationship between the interest rate and the demand for loanable funds. The lower the interest rates are, the more likely people are to borrow funds, which means that the demand increases and the demand curve shifts outward. When the rate increase, the demand for loanable funds decreases, which would cause the demand curve to shift inward.

However, there is a direct relationship between the interest rate and the supply of loanable funds. When the rate increases, the quantity of supplied funds increases as well. However when the rate decreases, the quantity of supplied funds decreases as well.

The market interest rate is determined by the factors that control the supply and demand for funds: When the demand for loanable funds decreases and shifts inward, the rate decreases (the equilibrium is lower). However, with an increase in demand and an outward shift of the demand curve, the equilibrium increases and results in a higher interest rate.


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Loanable Funds Theory - Global Effect of Excessive Borrowing - Money Market Funds
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Understanding Stock Market Trading And Commodity Trading Tips

images (5)The commodity market is growing tremendously, and traders are beginning to enter the market. It is true that the commodity market has driven economies of many first class countries over the past few years. However, the commodity market remains volatile. This requires that traders familiarize themselves with the tips on how to trade their commodity features to avoid losses. Together with the right attitude and common learning resources, traders should be careful when trading. Maybe you are asking whether master traders are affected by these realities. The fact is that whether you are a beginner or an experienced commodity trader, you may need these stock market trading tips to succeed in your trading.

Know the technical language used in commodity trading

The field is one of the fastest growing and complicated areas. This means that continuous learning about the growing number of market concepts and changing nature of financial transactions would help you a lot. Many commodity traders consider this a challenge to their trading success. However, learning about the working and trends in the commodity market can help you create profits. This means that venturing into the commodity market without the knowledge about the market can be a prerequisite to failure.

Study how other traders earn

Besides monitoring your trade, you also need to know how your competitors are earning from the same market or other markets. Using other traders, especially experienced traders, as a platform helps you to understand unique styles that can be profitable to you. While it pays to use your experience and the experience of other traders, it is imperative to seek the help of commodity discount brokers.

These professionals are trained in the field of commodity trading. Commodity discount traders secure your financial transactions. They also help you to identify the best trading leads and the right trading partners.

Trading in different commodity classes can be difficult at the beginning, but monitoring all your classes can help you manage the trade. However, you should not rush to pursue various classes of trade unless you have the right experience.

Commodity trading tips are essential in the development of the global financial market. This can make you create more profits than what you can get from a nine-to-five o’clock job. Whether you decide to invest in currency trading, commodity trading or stock trading, it is essential to know that the business can be risky. However, knowing how the market reacts to certain events can help to reduce some of the losses associated with a volatile market.


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Understanding Stock Market Trading And Commodity Trading Tips
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Fear and Greed: Driving Forces in the Stock Market

131111131714-stock-market-numbers-620xaThere are two powerful forces behind the success in the stock market-greed and fear. These two human emotions drive the stock market. While letting these emotions get the best of you can prove detrimental, harnessing them is the crucial key for success in the stock market. The market has and will always remain a volatile monster. It has the power to make traders feel very extreme emotions. These emotions are the driving forces behind the scenes, the inner workings that make the market go.

Webster’s Dictionary defines greed as a selfish and excessive desire for more of something (such as money) than is needed. It is very easy for investors to get tangled up in greed. With that said, desire is a regular component of human nature. It only becomes a problem when that desire spins out of control into something extreme and sometimes uncontrollable-greed.

Some people get on board with the stock market believing it’s a get-money-quick tactic. While that can be the case in certain circumstances, it is certainly not always. People are always looking for ways to make the most money in the shortest amount of time possible. Since investments can turn a quick profit, people are quick to jump on board.

This greed can lead to impulsive investments, controlling the way people trade in the stock market. Greed can make people change their plans and make rash decisions all because they’re trying to make money quickly. For that reason, promising yourself to stick to a predetermined plan is crucial before you feel even a hint of greed.

The funny thing about fear is that it can play a variety of roles in people’s lives. Some people are fearful of failure while others are fearful of success. Fear is a dangerous and powerful emotion because it can take on so many different forms. Stock investment requires you take a risk, and risk-taking can spur on fear in a great percentage of human beings. The way that people channel the fear is what differs from person-to-person.

When deciding to get involved in the stock market, you must first do some research. The most important research you must conduct is not on the market, but on yourself. Know your limits, and know your motives. Get to know your weaknesses just as well as your strengths. Think about how fear and greed affect other aspects of your life outside the stock market. Think about the ways in which money motivates you. Think about all the reasons why you want to be involved with investing to begin with. Acknowledging the power of greed and fear before even opening the door to the stock market will help you to better manage these feelings if they should arise.

If you’re looking to get involved in your own investment plan, it is crucial to fully understand the roles that greed and fear can play. Letting these emotions spin out of control can bring about the demise of even the most fruitful stock trader. The management of one’s greed and fear will directly affect the success of an investment strategy.


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Fear and Greed: Driving Forces in the Stock Market
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