In an Economy Described Collectively by a Macroeconomic Policy Curve

Multiple Choice

In an economy described collectively by a macroeconomic policy curve of the formY^ˆ = ⁻ π − π *) , an expectations-augmented

A) lower inflation increasing nominal interest rates.
B) higher inflation increasing nominal interest rates.
C) lower inflation decreasing nominal interest rates.
D) higher inflation decreasing nominal interest rates.
E) changes in real variables and not adjustments in prices.