In the Basic New Keynesian Model, If the Central Bank

question 19

Multiple Choice

In the Basic New Keynesian model, if the central bank is initially achieving its goals, and the natural rate of interest rises, the central bank should

• A) reduce the nominal interest rate by the amount of the natural real interest rate increase.
• B) reduce the nominal interest rate by less than the amount of the natural real interest rate increase.
• C) do nothing.
• D) increase the nominal interest rate by the amount of the natural real interest rate increase.
• E) increase the nominal interest rate by less than the amount of the natural real rate of interest increase.

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Definitions:

Urophilia

A paraphilia in which a person gets sexual pleasure from contact with urine.

Klismaphilia

A sexual arousal derived from the introduction of liquids into the rectum and colon via the anus.

Coprophilia

A paraphilia in which a person gets sexual pleasure from contact with feces.

Prostitutes

Individuals who engage in sexual activity with others in exchange for money or other forms of compensation.