If a point lies on the monetary policy reaction curve, and at this point the inflation rate equals the target rate of inflation, we know that:
A. the real interest rate corresponding to this point is below the long-run real interest rate.
B. current output is above potential output.
C. the real interest rate corresponding to this point is equal to the long-run real interest rate.
D. the real interest rate corresponding to this point is above the long-run real interest rate.
Answer: C
Economics
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The model that states that individuals develop their inflation expectations after considering all the available information is referred to as the:
A) adaptive expectations model. B) marginal expectations model. C) composite expectations model. D) rational expectations model.
Economics