_____, the Time-Inconsistency Problem Is Eliminated

question 167

Multiple Choice

_____, the time-inconsistency problem is eliminated.

• A) When an inflation or a recession is correctly anticipated
• B) When lags associated with monetary and fiscal policy are extremely short
• C) When discretionary macro policy is replaced with fixed policy rules that are well publicized
• D) When expectations about an economy adjust very slowly
• E) When the price level in an economy adjusts over time with changes in aggregate demand

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Definitions:

Stock Markets

Places where shares of publicly held companies are bought and sold, facilitating capital raising for companies and investment opportunities for individuals.

Excess Revenues

Funds that exceed the regular income of a company or organization, often reflecting higher profits.

Nonprofit

An organization that operates for charitable, educational, cultural, scientific, or social benefit rather than for profit, reinvesting any surplus revenues in the mission of the organization.

Trust Theory

An analytical framework that explores how trust is built, maintained, and broken in relationships between parties.