Assume That the Desired Reserve Ratio Is 10 Percent and There

Multiple Choice

Assume that the desired reserve ratio is 10 percent and there are no excess reserves in the banking system.Also, suppose that the full-employment, non-inflationary level of GDP in this closed, private economy is $1,200. Refer to the above information.The equilibrium interest rate in this economy is:

A) 3 percent.
B) 4 percent.
C) 5 percent.
D) 6 percent.