Financial equilibrium refers to a state where the supply and demand for financial resources are balanced. In this condition, the amount of money available in the market matches the amount that people and businesses want to borrow or invest. This balance helps maintain stable interest rates and promotes economic growth. When financial equilibrium is achieved, it can lead to increased confidence among investors and consumers. This stability encourages spending and investment, which can further stimulate the economy. Disruptions to this balance, such as sudden changes in interest rates or government policies, can lead to economic fluctuations and uncertainty.