The demand for capital is Q^D = 100 - 20r and the supply of capital is Q^S = 12r - 28, where r is the interest rate and Q is the quantity of capital in millions of dollars. The equilibrium interest rate is r = ____.

Question

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To find the equilibrium interest rate, set the demand for capital equal to the supply of capital and solve for r: 100 - 20r = 12r - 28. Solving this equation gives r = 4.

The Demand for Capital Is QD = 100 - 20r

The Demand for Capital Is Q^D = 100 - 20r