According to the General MP Rule of the IS-MP-PC Model

question 30

Multiple Choice

According to the general MP rule of the IS-MP-PC model, a 1% increase in both the current inflation rate and the inflation target of the central bank will cause the central bank to:

• A)raise the nominal interest rate by 1%.
• B)raise the real interest rate by 1%.
• C)keep the nominal interest rate constant.
• D)none of the above.

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