To Solve the "Time Inconsistency" Problem in Macro Policy,a Nation

question 52

Multiple Choice

To solve the "time inconsistency" problem in macro policy,a nation may well have to

• A)restrict itself in the present from taking certain policy moves in the future.
• B)lift all restrictions on future policy moves.
• C)present policy moves to the public, for example, in a referendum.
• D)use the courts to settle policy disputes.
• E) make the central bank more responsive to the popular will.

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Definitions:

Linear Equations

Algebraic equations in which each term is either a constant or the product of a constant and a single variable.

Linear Equations

Mathematical equations that graph as straight lines, representing a constant rate of change.

Linear Graphing

A method of representing data or functions as a straight line on a graph, which showcases a linear relationship between variables.

Exponential Growth

Increase at a rate proportional to the current value, resulting in the growth accelerating over time.