If a Government Managed to Reduce the Time Inconsistency Problem

question 17

Multiple Choice

If a government managed to reduce the time inconsistency problem by mandating that the central bank target inflation at a low rate,then

• A)the long-run Phillips curve would shift right.
• B)the long-run Phillips curve would shift left.
• C)the short-run Phillips curve would shift up.
• D)the short-run Phillips curve would shift down.

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Definitions:

Generation Y

Also known as Millennials, this demographic cohort follows Generation X and is typified by their birth years from the early 1980s to the mid-1990s to early 2000s.

Work Ethic

A firm belief in the dignity and value of work and, therefore, important for favorably impressing a manager.

Morally Disengage

The cognitive process where individuals justify or rationalize behavior that is unethical or harmful, often to sustain self-esteem or adhere to group norms.

Unethical

Actions or behavior that violate moral or professional principles, often involving dishonesty, harm, or unfair treatment.