Question: Take a look at the picture. A shift from MP, to MP, will occur if Real interest rate, r O A. the term structure effect

Take a look at the picture.

A shift from MP, to MP, will occur if Real interest rate, r O A. the term structure effect increases. B. the Fed decreases its target for the short - term nominal interest rate. B MP O C. the expected inflation rate increases. A MP, O D. the default - risk premium decreases. C ra MP Y Output gap, Y (percent deviation from potential GDP)

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