The ________ Problem of Discretionary Policy Arises Because Economic Behavior

question 26

Multiple Choice

The ________ problem of discretionary policy arises because economic behavior is influenced by what firms and people expect the monetary authorities to do in the future.

• A)moral hazard
• B)time-inconsistency
• C)nominal-anchor
• D)rational-expectation

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Definitions:

Consciousness

The state of being awake and aware of one's surroundings, thoughts, feelings, and the self.

Psychology

The scientific study of the human mind and its functions, especially those affecting behavior in a given context.

Serial Processing

A method of information processing in which operations are carried out one after the other in a sequence.

Parallel Processing

The processing of many aspects of a problem simultaneously; the brain’s natural mode of information processing for many functions, including vision. Contrasts with the step-by-step (serial) processing of most computers and of conscious problem solving.