The aggregate demand curve is Y = 15 – 0.2π when the inflation rate f

The aggregate demand curve is Y = 15 – 0.2π 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) automatic adjustment
C) autonomous easing
D) to increase autonomous spending
E) none of the above

ANSWER

C