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In the basic New Keynesian model with inflation, if the natural rate of interest decreases and the central bank does not change the nominal interest
In the basic New Keynesian model with inflation, if the natural rate of interest decreases and the central bank does not change the nominal interest rate in response, then
A.
output declines and inflation goes up.
B.
output increases and inflation goes down.
C.
output does not change and inflation does not change.
D.
output declines and inflation goes down.
E.
output increases and inflation goes up.
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