If a Point Lies on the Monetary Policy Reaction Curve

question 118

Multiple Choice

If a point lies on the monetary policy reaction curve, and at this point the inflation rate equals the target rate of inflation, we know that:

• A)The real interest rate corresponding to this point is above the long-run real interest rate
• B)The real interest rate corresponding to this point is equal to the long-run real interest rate
• C)The real interest rate corresponding to this point is below the long-run real interest rate
• D)Current output is above potential output

---

Definitions:

Retain Information

The ability to maintain and keep information in memory over time.

Memory

The cognitive process involving the encoding, storing, and retrieving of information experienced or learned.

Encoding Failure

an inability to properly store information into long-term memory, leading to the absence of memory recall.

Recall

The mental process of retrieving information from the past, which can vary in ease depending on several factors like recency and relevance.