The monetary policy reaction curve:
A) is the guideline the Fed publishes in setting their interest rate target.
B) approximates the behavior of central bankers.
C) has remained fairly constant over the years.
D) is set by Congress and given to the Fed as a guideline to follow.

Question

Quizplus · Accepted Answer

The monetary policy reaction curve is a theoretical framework that approximates the behavior of central bankers in relation to how they adjust interest rates to achieve specific macroeconomic goals, such as controlling inflation or stabilizing economic growth. It is not a specific guideline or directive published by the Fed or set by Congress. The shape and slope of the curve may vary depending on the economic conditions and the policymakers' preferences and beliefs.

The Monetary Policy Reaction Curve