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The loan market is perfectly competitive and can be accurately described the following sets of equations, where Q is the quantity of loans, r is the interest rate Price on the loans, and Y is the average income level. Qd = 1, 000(1 + Y ) 25, 000 · r and Qs = 3, 000 + 25, 000 · r.

Let Y=2. What is the equilibrium interest rate?

 

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Economics 4 Months Ago 15 Views
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