Which of the following is true about the Taylorprinciple?

A.

it explains the link between higher inflation and higher real interest rates

B.

it reflects the practice of monetary policy

C.

it is the foundation for an upward sloping MP curve

D.

all of the above

E.

none of the above

If the Federal Reserve raises interest rates in an autonomous tightening________ .

A.

there is an upward movement along the IS curve

B.

the AD curve shifts to the left

C.

the MP curve shiftsup, raising the real interest for any given level of the inflation rate

D.

all of the above

E.

none of the above

The aggregate demand curve is Y= 15 0.2 when the inflation rate falls from 6 percent to 5 percent.Then, output increases from 13.8 to 17. The response of monetary policy to the inflation decline has been________.

A.

autonomous tightening

B.

to increase autonomous spending

C.

autonomous easing

D.

automatic adjustment

E.

none of the above