The Demand and Supply of Capital Are Given by Q^D

question 18

Multiple Choice

The demand and supply of capital are given by Q^D = 200 - 60r and Q^S = 20r - 40, where Q is the quantity of capital in millions of dollars and r is the interest rate measured as a percentage. What is the equilibrium interest rate?

• A) 5%
• B) 2%
• C) 8%
• D) 3%

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