In the New Keynesian Rational Expectations Model, When the Nominal

question 17

Multiple Choice

In the New Keynesian Rational Expectations model, when the nominal interest rate is constant forever,

• A) there is one equilibrium, which does not satisfy the long-run Fisher relation.
• B) there are two equilibria, both of which satisfy the long-run Fisher relation.
• C) there are many equilibria, none of which satisfy the long-run Fisher relation.
• D) there is one equilibrium, and it satisfies the long-run Fisher relation.
• E) there are many equilibria, but each equilibrium satisfies the Fisher relation in the long run.

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