The basic New Keynesian model in a closed economy is given by two equations:

i=(Y - Y_m)+ 0.96E(i'),

Y^d= -10(R -E(i') )+ 10.

Note: the notations follow textbook and lectures.

When the output gap is closed, the equilibrium inflation rate equals _______.

A.2.88%

B.-3%

C.3%

D.1.92%