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    Calculating equilibrium interest rate

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    Suppose the total demand for money is described by the following equation:
    MD = 30-2i
    where i is the prevailing market interest rate. The total supply of money is described by the following equation:
    MS = 3 + 7i

    According to liquidity preference, what is the equilibrium interest rate?

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    According to liquidity preference, equilibrium interest rate is ...

    Solution Summary

    Solution describes the steps to calculate equilibrium interest rate.