What Will Time Inconsistency Cause

question 124

Multiple Choice

What will time inconsistency cause?

• A) It will cause the short-run Phillips curve to be higher than it otherwise would.
• B) It will cause the short-run Phillips curve to be lower than it otherwise would.
• C) It will cause the long-run Phillips curve to be farther to the right than it otherwise would.
• D) It will cause the long-run Phillips curve to be farther to the left than it otherwise would.

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Definitions:

Tax-Deductible

Expenses that can be subtracted from one's taxable income, effectively reducing the tax liability.

SIMPLE Plan

Savings Incentive Match Plan for Employees, a type of tax-deferred employer-provided retirement plan that allows small businesses to set aside money and invest it for employees.

Vested

A status where an employee has earned the right to keep benefits, often pertaining to retirement plans, regardless of employment status.

Pension Plan

A retirement plan that requires an employer to contribute to a pool of funds set aside for an employee's future benefit.