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The Demand for Capital Is QD = 100 - 20r

Question 10

Multiple Choice

The demand for capital is QD = 100 - 20r and the supply of capital is QS = 12r - 28, where r is the interest rate and Q is the quantity of capital in millions of dollars. Assume that households increase savings such that households save $20 million more at every interest rate level. The new equilibrium quantity of capital is ____.


A) 22.7
B) 25.6
C) 32.4
D) 34.8

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