CEVAP:

Funds are supplied to the loanable funds market by lenders (savers) those who are households or businesses that in order to have more available funds in the future, they are willing to give up some current use of them. Generally, lending option is preferred as the interest rates increase. However, compared to the firms, the decision of consumers about saving should be analyzed more deeply.

Economists think that when households make their consumption choice at any point of their life, they consider the stream of income over their lifetimes not the current income they have. This means that households’ consumption possibilities are defined by the expected income. Thus, consumers make the decision of whether to spend less of their expected income now in the hope that they will have more available income to spend in the future or to consume more now by borrowing against their future income.