When a financial friction is added to the MP curve we have:
A) $R _ { t } - \bar { r } = \bar { f } + \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$
B) $R _ { t } = \bar { f } + \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$
C) $R _ { t } - \bar { r } = \bar { f } - \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$
D) $\tilde { Y } _ { t } = \bar { a } - \bar { b } \bar { f } + \bar { b } \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$
E) $\tilde { Y } _ { t } = \bar { a } - \bar { b } \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$

Question

Quizplus · Accepted Answer

The Answer is A

When a Financial Friction Is Added to the MP Curve Rt−rˉ=fˉ+mˉ(πt−πˉ)R _ { t } - \bar { r } = \bar { f } + \bar { m } \left( \pi _ { t } - \bar { \pi } \right)Rt​−rˉ=fˉ​+mˉ(πt​−πˉ)

When a Financial Friction Is Added to the MP Curve $R _ { t } - \bar { r } = \bar { f } + \bar { m } \left( \pi _ { t } - \bar { \pi } \right)$