-Refer to Figure 8-7

Multiple Choice

-Refer to Figure 8-7.What is the equilibrium interest rate in the above figure?

A) 6% because that is where the total supply of funds equals the total demand.
B) 5% because business and the government want to borrow as much as possible.
C) 6% because that is where the amount of funds demanded is equal to the amount of funds demanded.
D) 7% because households refuse to lend enough funds at a lower interest rate.
E) 5% because households refuse to lend enough funds at a higher interest rate.