Take a look at the IS-MP-PC model shown here. The equilibrium real interest rate is:

A)4%.
B)3%.
C)2%.
D)-1%.

Name: Take a look at the IS-MP-PC model shown here. The equilibrium real interest rate is: A)4%. B)3%. C)2%. D)-1%.
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Question

Take a look at the IS-MP-PC model shown here. The equilibrium real interest rate is:

A)4%. 
B)3%. 
C)2%. 
D)-1%.

Quizplus · Accepted Answer

The equilibrium real interest rate is given by the intersection of the IS curve and the MP curve. In this case, the intersection occurs at a real interest rate of 3%.

Take a Look at the IS-MP-PC Model Shown Here