If policymakers are not aggressive about keeping inflation close to the target rate, the slope of the monetary policy reaction curve would be:
A)Steep
B)Relatively flat
C)Horizontal
D)Negative

Question

Quizplus · Accepted Answer

If policymakers are not aggressive about keeping inflation close to the target rate, then the slope of the monetary policy reaction curve would be relatively flat. This means that changes in inflation would have little effect on monetary policy decisions, which could ultimately lead to higher inflation rates over time.

If Policymakers Are Not Aggressive About Keeping Inflation Close to the Target