Question: In the basic New Keynesian model, if anticipated future inflation increases, the central bank should Question content area bottom Part 1 A. reduce the nominal

In the basic New Keynesian model, if anticipated future inflation increases, the central bank should Question content area bottom Part 1 A. reduce the nominal interest rate one-for-one with the decrease in the anticipated future inflation rate. B. increase the nominal interest rate one-for-one with the decrease in the anticipated future inflation rate. C. hold the nominal interest rate constant. D. reduce the nominal interest rate less than one-for-one with the decrease in the anticipated future inflation rate. E. increase the nominal interest rate less than one-for-one with the decrease in the anticipated future inflation rate

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