Use the Following to Answer Questions :
Equation: Monetary Policy $\pi$

question 28

Multiple Choice

Use the following to answer questions :
Equation: Monetary Policy Rule
i_t = $\pi$ _t + $\rho$ + $\theta$ _$\pi$ ( $\pi$ _t - $\pi$ *_t) + $\theta$ _Y(Y_t - $\bar { Y } _ { t }$ )
-(Equation: Monetary Policy Rule) Given the monetary policy rule of the dynamic model of aggregate demand and aggregate supply, if the inflation rate increases by 1 percentage point, by how much does the nominal interest increase:

• A) 1
• B) 1 + \(\rho\)
• C) 1 + \(\theta\) _\(\pi\)
• D) \(1 + \theta _ { \pi } \left( 1 - \pi _ { \mathrm { t } } { } ^ { * } \right)\)

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Definitions:

Foramen Ovale

An opening in the septum between the right and left atria of the fetal heart, which normally closes shortly after birth.

Nonfunctional Lungs

Lungs that are unable to perform the standard process of gas exchange between oxygen and carbon dioxide.

Fetus

A developing mammal or human during the later stages of pregnancy after the embryonic stage, showing recognizable features of the species.

Chordae Tendineae

Heartstrings; fibrous cords that connect the papillary muscles to the tricuspid and mitral valves in the heart, preventing valve inversion.