Consider a dnyamic macro model, where the full-employment level of output Yt is constant. If the central bank decided to increase its target rate of inflation pie,

Q.)when the model settle down to its new equilibirum, would the nominal interest rate be higher, lower, or the same as it was before the policy change.

Q.) At the new equillibirum would the output be higher or lower of the same as in the equilibirum before the change in the policy.

Explain