The "Time Inconsistency" Argument Is That a Downward Shift of the Short-Run

question 91

Multiple Choice

The "time inconsistency" argument is that a downward shift of the short-run Phillips Curve,which comes about with a ________ of inflationary expectations,is more likely when monetary policy ________.

• A)lowering,follows a rigid rule
• B)lowering,is at the discretion of policymakers
• C)raising,follows a rigid rule
• D)raising,is at the discretion of policymakers

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Definitions:

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, assuming all resources are fully and efficiently utilized.

Unemployment Rate

The slice of the labor pool actively seeking employment but currently unemployed.

Full Production

The state where all available resources are being used efficiently to produce goods and services.

Economic Problem

The fundamental issue of limited resources to meet unlimited wants, necessitating choices and prioritization in allocation.