Loanable funds market:

 

• The market where savers and borrowers exchange funds at the real rate of interest.
• Demand for loanable funds or borrowing comes from households,firms,gov and the foreign sector. The demand for loan able funds is in fact the supply of bonds. 
• The supply of loan able funds or savings comes from households,firms,gov and the foreign sector. The supple of loan able funds is also the demand for bonds.

Changes in the demand for Loanable funds 

• Remember that demand for Loanable funds=borrowing 
•  More borrowing=more demand for Loanable funds (->)
• Less borrowing=less demand for Loanable funds (<-)

Changes in the supply of Loanable funds 

• Remember that supply of Loanable funds=saving 
• More saving=more supply of Loanable funds(->)
• Less savings=less supply of Loanable funds (<-)

Final thoughts on Loanable funds 

• Changes in saving and borrowing create change in loanable funds and therefore the r% changes
• change in the real interest rate will affect GDP