The Existence of the Time Inconsistency Problem in Macro Policy

question 23

Multiple Choice

The existence of the time inconsistency problem in macro policy suggests which of the following?

• A)Use fiscal and monetary policy to fine tune the economy.
• B)Reduce the independence of the central bank.
• C)Appoint someone who is more conservative (economically)than the rest of the government to head the central bank.
• D)Intervene frequently in the foreign exchange market.
• E) Eliminate rational expectations from econometric models used for forecasting.

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Definitions:

Three-point Gait

A method of walking with crutches where one leg and both crutches touch the ground simultaneously, mimicking a three-point stance.

Fractured Leg

A break in any of the bones within the leg, which can range in severity from a thin crack to a complete break.

Tripod Alternating Position

A physical position or maneuver often used in rehabilitation and physical therapy to help improve balance and stability.

Full Leg Cast

A type of orthopedic cast that encases the entire leg from the thigh to the foot, used to immobilize the leg to heal bones or injuries.