“With autonomous changes in the policy interest rate, the Federal Reserve cannot determine the long run equilibrium level of the real interest rate or potential output and will only be able to determine inflation” This statement is consistent with ________.

A) the notion that shifts in the MP curve may lead to shifts in the AD and AS curves but the LRAS remains unchanged
B) the notion of long-run independence between nominal and real variables
C) the notion of monetary neutrality
D) all of the above
E) none of the above

ANSWER:

D