In the Basic New Keynesian Model, a Decrease in the Natural

question 30

Multiple Choice

In the Basic New Keynesian model, a decrease in the natural rate of interest causes the following effect:

• A) nothing.
• B) output declines and inflation goes up.
• C) output declines and inflation goes down.
• D) output increases and inflation goes down.
• E) output increases and inflation goes up.

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