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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?Β 
      A 4% Correct Answer Incorrect Answer
      B 5.9% Correct Answer Incorrect Answer
      C 6.37% Correct Answer Incorrect Answer
      D 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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