Based on the given figure, the economy is initially at point A on the monetary policy reaction function (RF₁) and the aggregate demand curve (AD₁) . The actual rate of inflation is π' and the Federal Reserve's target inflation rate is π*₁. 
If the Federal Reserve raises its target inflation rate to π*₃, then the Federal Reserve's monetary policy reaction function will ________ and the aggregate demand curve will ________.
Definitions:
Herfindahl Index
An indicator used to measure the size of firms in relation to the industry and an index of market concentration.
Barriers to Entry
Factors that prevent or hinder new firms from entering an industry, including high startup costs and regulatory restrictions.
Product Differentiation
The process by which companies distinguish their products from those of competitors in the eyes of consumers, through unique features, design, quality, or branding.
Concentration Ratio
A measure used to determine the market share or relative size of the top firms in an industry as an indicator of the level of competition.
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