In the case above, the equilibrium interest rate in this economy is known to be 8 percent.
Equilibrium Interest Rate is known to be a term that connote that point where the quantity of money demanded is known to often equals the quantity of money supplied and this is one that determines or tell the equilibrium interest rate in any kind of economy.
The formula for the calculation of the equilibrium level of income is only if aggregate supply (AS) is said to be equal to aggregate demand (AD);
Hence AS = AD.
The formula is: Y = C + I + G.
where Y = aggregate income
C = consumption
I = investment expenditure
G = government expenditure.
Hence, In the case above, the equilibrium interest rate in this economy is known to be 8 percent.
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