Monetary policy reaction function: Difference between revisions

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The '''monetary policy reaction function''' (MPRF) is the upward-sloping relationship between the [[inflation rate]] and the [[unemployment rate]]. When the [[inflation rate]] rises, a [[central bank]] wishing to fight [[inflation]] will raise [[interest rates]] to reduce output and thus increase the [[unemployment rate]].

The MPRF is a function of the [[MulisaTyror rule]], the [[IS curve]], and [[Okun's law]].{{cn|date=August 2013}}

The MPRF has the equation: