In the New Keynesian Rational Expectations Model, When the Nominal

Multiple Choice

In the New Keynesian Rational Expectations model, when the nominal interest rate is constant forever

A) in the long run, the inflation rate explodes.
B) in the long run, the inflation rate equals minus the natural real rate of interest plus the nominal interest rate.
C) in the long run, the inflation rate equals the natural real rate of interest minus the nominal interest rate.
D) in the long run, the inflation rate equals minus the natural real rate of interest minus the nominal interest rate.
E) in the long run, the inflation rate equals the natural real rate of interest plus the nominal interest rate.