If the Central Bank Announces That Its Target for the Overnight

If the central bank announces that its target for the overnight rate is rising from 4 percent to 4.25 percent, how do you expect workers and firms to react?

A) If the central bank's announcement is not credible, workers and firms will not expect inflation to fall so they will reduce their consumption and investment spending, which will increase aggregate demand and reduce inflation.
B) As long as the central bank's announcement is credible, workers and firms will increase their consumption and investment spending, which will increase aggregate demand and inflation.
C) Workers and firms will incorporate the increase in interest rates into their expectations of inflation, and they will expect inflation to rise as a result of central bank's policy announcement.
D) As long as the central bank's announcement is credible, workers and firms will reduce their consumption and investment spending, which will reduce aggregate demand and reduce inflation.