What Does the Time Inconsistency of Policy Imply

question 90

Multiple Choice

What does the time inconsistency of policy imply?

• A)It implies that what policymakers say they will do is generally what they will do, but people don't believe them because of current policy.
• B)It implies that when people expect that inflation will be low, it is harder for the Bank of Canada to increase output by increasing the money supply.
• C)It implies that people will believe the Bank of Canada policy will be more inflationary than the Bank of Canada claims.
• D)It implies that the Bank of Canada coordinates its actions with elected officials.

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