Final answer:
If policy makers do not follow the Taylor principle in aggregate demand and supply analysis, it can lead to unstable inflation. The Taylor principle is the idea that policymakers should raise interest rates by more than the increase in inflation in order to stabilize the economy.
Step-by-step explanation:
If policy makers do not follow the Taylor principle in aggregate demand and supply analysis, it can lead to unstable inflation.
The Taylor principle is the idea that policymakers should raise interest rates by more than the increase in inflation in order to stabilize the economy.
By not following this principle, policymakers risk allowing inflation to become lasting and persistent, which can have negative effects on businesses and individuals.
Instead of focusing on serving customers, they will need to spend time and effort protecting themselves against inflation.