The medium-run equilibrium is characterized by four conditions: 1. Output is equal to potential output Y = Yn and the real policy rate must be chosen by the central bank so: 2. The unemployment rate is equal to the natural rate u = un. 3. The real policy interest rate is equal to the natural rate of interest r where rn is defined as the policy rate where Yn = C C(Yn-T) + ( Yn 'n +x) 4. The expected and actual rate of inflation is equal to the anchored or target rate of inflation, . This implies the nominal policy rate i=₁+. n Which of the following best characterizes the behavior of inflation in a medium-run equilibrium if the level of expected inflation is formed so ² equals ? A. It cannot be determined. B. 0. C. The same as rn. OD. T. + G.