The Demand for Capital Is Q^D = 80 - 15r

Multiple Choice

The demand for capital is Q^D = 80 - 15r and the supply of capital is Q^S = 20r - 60, where r is the interest rate and Q is the quantity of capital in millions of dollars. Businesses become more optimistic about the business environment and borrow $70 million more capital at each interest rate level. The equilibrium interest rate as a result of this newfound optimism is r = ____.

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