In the IS-MP Model, the MP Curve Is Upward Sloping

question 27

Multiple Choice

In the IS-MP model, the MP curve is upward sloping from left to right because it is assumed that

• A) central banks have no control over interest rates.
• B) central banks will raise interest rates when national income rises in order to dampen inflationary pressure.
• C) central banks will increase the money supply when national income rises in order to dampen inflationary pressure.
• D) monetary policy can have no effect on national income.