Essay
The demand for capital is QD = 80 - 15r and the supply of capital is QS = 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. What happens to the equilibrium interest rate and quantity of capital as a result of this newfound optimism?
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First, find the equilibrium price and qu...View Answer
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