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 ?' and the Federal Reserve's target inflation rate is ?*1. 
If the Federal Reserve raises its target inflation rate to ?*3, then the Federal Reserve's monetary policy reaction function will ________ and the aggregate demand curve will ________.
A. shift to RF3; shift to AD2
B. shift to RF2; shift to AD3
C. shift to RF2; shift to AD2
D. shift to RF3; shift to AD3
Answer: A
Economics
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