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

Multiple Choice

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

A) lower the nominal interest rate.
B) raise the nominal interest rate.
C) always raise the nominal interest rate by more than 1%.
D) always reduce the nominal interest rate by more than 1%.