Question: The 1st Generation Crisis Model, Myopic Version When the peg breaks in the first generation crisis model due to the monetization of a persistent fiscal

The 1st Generation Crisis Model, Myopic Version

When the peg breaks in the first generation crisis model due to the monetization of a persistent fiscal deficit, the nominal interest rate rises by...

A. the rate of growth of domestic credit

B. less than the rate of inflation

C. it doesn't increase, it decreases

D. more than the rate of inflation

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