In the dynamic model of aggregate demand and aggregate supply, if the central bank chooses a large value of , the responsiveness of nominal interest rates to inflation, and a small value of Y, the responsiveness of nominal interest rates to output, then the DAD curve will be relatively _____, and supply shocks will have relatively ____ impacts on inflation than output.
A) flat; larger
B) flat; smaller
C) steep; larger
D) steep; smaller
Correct Answer:
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