According to the Monetary Policy Rule (Assuming $\theta$ _$\pi$ > 0) When Inflation Increases, the Central Bank

Multiple Choice

According to the monetary policy rule (assuming $\theta$ _$\pi$ > 0) when inflation increases, the central bank increases the nominal interest rate by _____ the increase in the rate of inflation, which _____ the real interest rate.

A) more than; increases
B) less than; decreases
C) an amount equal to; does not change
D) less than; increases