What tool is available to monetary policymakers to shift the short-run aggregate supply curve to the left following a positive inflation shock?
A) A rightward shift of the monetary policy reaction curve
B) A leftward shift of the monetary policy reaction curve
C) Open market purchases of government securities
D) None of the answers given is correct; the actions of monetary policymakers affect the dynamic aggregate demand curve

Question

Quizplus · Accepted Answer

Monetary policymakers primarily influence the aggregate demand curve through their actions, such as adjusting interest rates or conducting open market operations. Their tools do not directly shift the short-run aggregate supply curve; instead, they affect economic activity and inflation by influencing demand.

What Tool Is Available to Monetary Policymakers to Shift the Short-Run