The Upward Slope of the MP Curve Indicates That

question 28

Multiple Choice

The upward slope of the MP curve indicates that

• A)the central bank lowers real interest rates when inflation rises.
• B)the central bank raises real interest rates when inflation falls.
• C)the central bank raises nominal interest rates when inflation rises.
• D)the central bank raises real interest rates when inflation rises.

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Definitions:

Qdoba Burritos

A brand of fast-casual restaurants known for their Mexican-style burritos and other dishes.

Long-Run Price Elasticity

The measure of responsiveness of quantity demanded or supplied to a change in price over a long period, allowing all inputs to be adjusted.

Short-Run Price Elasticity

A measure of the responsiveness of quantity demanded or supplied to a price change over a short period.

Gasoline

A volatile, flammable liquid used primarily as fuel in internal combustion engines.