A vertical aggregate supply curve favors which of the following policies?
A) Discretionary policy
B) Fiscal policy
C) The Fed's eclecticism
D) Fixed rules

Question

Quizplus · Accepted Answer

A vertical aggregate supply curve implies that changes in aggregate demand do not affect the overall output in the economy. Therefore, the best policy choice in this scenario is fixed rules, which provide consistent and predictable guidelines for economic policy without the need for discretionary or ad hoc decision-making. Fiscal policy and the Fed's eclecticism may not be effective in this situation as they rely on the assumption that changes in demand will impact output.

A Vertical Aggregate Supply Curve Favors Which of the Following