If policymakers are aggressive in keeping current inflation near the target inflation rate then the monetary policy reaction curve will:
A) be steep.
B) be flat.
C) have an undefined slope.
D) be vertical.

Question

Quizplus · Accepted Answer

An aggressive approach to maintaining current inflation near the target inflation rate means that policymakers are more sensitive to changes in inflation and will respond more strongly to deviations from the target rate. This results in a steeper monetary policy reaction curve.

If Policymakers Are Aggressive in Keeping Current Inflation near the Target