Assume that the economy is initially operating at the natural level of output. When the central bank controls the interest rate, an increase in the price target will cause:
A) a decrease in the interest rate in the medium run.
B) an increase in investment in the medium run.
C) an increase in consumption in the medium run.
D) no change in the nominal wage in the medium run.
E) no change in the real wage in the medium run.

Question

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The Answer of Assume that the economy is initially operating at the natural level of output. When the central bank controls the interest rate, an increase in the price target will cause:
A) a decrease in the interest rate in the medium run.
B) an increase in investment in the medium run.
C) an increase in consumption in the medium run.
D) no change in the nominal wage in the medium run.
E) no change in the real wage in the medium run.

Assume That the Economy Is Initially Operating at the Natural