Multiple Choice
In the New Keynesian Rational Expectations model, when the nominal interest rate is constant forever
A) there are many equilibria, but each equilibrium satisfies the Fisher relation in the long run.
B) there is one equilibrium, which does not satisfy the long-run Fisher relation.
C) there are two equilibria, both of which satisfy the long-run Fisher relation.
D) there are many equilibria, none of which satisfy the long-run Fisher relation.
E) there is one equilibrium, and it satisfies the long-run Fisher relation.
Correct Answer:
Verified
Correct Answer:
Verified
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