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    Question

    Based on the IS curve and LM curve you have derived in Q36 and Q37, what is the equilibrium interest rate? 

    A 4% Correct Answer Incorrect Answer
    B 5.9% Correct Answer Incorrect Answer
    C 6.37% Correct Answer Incorrect Answer
    D 0% Correct Answer Incorrect Answer
    E 3.57% Correct Answer Incorrect Answer

    Solution

    Combining the IS curve and the LM curve we obtain the interest rate as

    r*=3.57%

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