The MP Curve ________.
A)demonstrates how central banks respond to changes in inflation with changes in the interest rate
B)shows how changes in interest rates affect equilibrium output
C)explains short run fluctuations in output and inflation
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

The MP Curve, or Monetary Policy Curve, illustrates how central banks adjust interest rates in response to changes in inflation to achieve their economic objectives.