Question: Question 43 (5 points) [5 Points) Assume that the output deviates form its potential level because of an adverse supply shock. If the central bank

Question 43 (5 points) [5 Points) Assume that the output deviates

Question 43 (5 points) [5 Points) Assume that the output deviates form its potential level because of an adverse supply shock. If the central bank raises the real interest rate, but not by enough, [To have a full mark in this question, you NEED to explain your answer in detail. Using New Keynesian model with the Phillips Curve with graphs, provide your solution in the final exam file posted under Assessment-Assignment) O a) both the AE curve and the Phillips curves shift up 0 b) the AE curve shifts up and the Phillips curves shift down 0 c) the AE curve shifts down and the Phillips curves shift up 0 d) None of the answers are correct 0 e) Both the AE curve and the Phillips curves shift down

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