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:

Abstract Reasoning

The ability to analyze information, detect patterns and relationships, and solve problems on a complex level that is not directly tied to concrete experiences.

Concrete Thinking

A style of thinking that relies on the physical, tangible reality and does not easily grasp abstract concepts.

Scaffolding

An educational approach involving more knowledgeable others providing temporary supports to help a learner achieve higher levels of understanding.

Zone of Proximal Development

A concept in developmental psychology introduced by Lev Vygotsky, describing the difference between what a learner can do without help and what they can achieve with guidance and encouragement.