Economists who believe that the Federal Reserve is likely to make a lot of mistakes in the conduct of monetary policy believe that the Federal Reserve should not respond to all AD shocks.

Question

Quizplus · Accepted Answer

If economists believe that the Federal Reserve is likely to make mistakes in its conduct of monetary policy, then they may believe that it is better for the Fed not to respond to every AD shock because doing so could lead to even more mistakes and potential negative consequences. Therefore, they may recommend a more conservative approach to monetary policy.

Economists Who Believe That the Federal Reserve Is Likely to Make