Economists who think that the Fed is likely to make a lot of mistakes believe that the Fed is best advised to:
A) adjust to every aggregate supply shock.
B) adjust to every aggregate demand shock.
C) follow a consistent policy.
D) follow a discretionary policy.

Question

Quizplus · Accepted Answer

Economists who believe that the Fed is likely to make a lot of mistakes argue that a consistent policy is the best approach. This is because discretion in policy-making creates uncertainty and increases the likelihood of errors. A consistent policy, on the other hand, is more predictable and reduces the potential for mistakes. Adjusting to every shock, whether supply or demand, may lead to frequent changes in policy that can be disruptive to the economy.

Economists Who Think That the Fed Is Likely to Make