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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Definitions:

Population Means

The average value of a characteristic in a population, and a parameter that is often estimated from sample data.

ANOVA

Analysis of Variance, a statistical method used to compare means of three or more samples, testing the hypothesis that all samples are taken from populations with the same mean.

Equal Variances

A statistical assumption that the variances of the items being compared are the same across all levels or groups.

ANOVA

ANalysis Of VAriance, a statistical method used to compare the means of three or more samples to find out if at least one is significantly different from the others.