When a risk premium is added to the short-run model it shifts the MP curve up.

Name: When a risk premium is added to the short-run model it shifts the MP curve up.
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Adding a risk premium to the short-run model increases the cost of borrowing and shifts the MP curve up, resulting in a higher interest rate. This reflects the higher compensation lenders demand for taking on additional risk.

When a Risk Premium Is Added to the Short-Run Model