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

    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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