Which of the Following Best Defines Time Inconsistency

question 19

Multiple Choice

Which of the following best defines time inconsistency?

• A) The increasing inaccuracy of econometric models as the time horizon becomes longer.
• B) The effect of economic uncertainty on short- run stabilisation policy.
• C) The tendency for the rise in output to be greater in the early years of a president's term, and smaller in the later years.
• D) The tendency for policy makers to deviate from a pre- announced optimal policy once agents in the economy have adjusted their behaviour and expectations based on the pre- announced policy.
• E) The effects of political electoral cycles on the business cycle.

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Definitions:

Social Exclusion

A process in which individuals or groups are systematically blocked from rights, opportunities, and resources that are normally available to members of society and that are key to social integration.

Scholarship

Financial support awarded to a student based on academic achievement or other criteria to help fund their education.

Alumni

Former students or graduates of a particular school, college, or university, often forming an association to maintain connections with their institution.

Sorting Mechanism

A process or system used to classify, organize, or rank individuals or groups based on certain criteria.