To Deal with the Time Inconsistency Problem Associated with Monetary

question 17

Multiple Choice

To deal with the time inconsistency problem associated with monetary policy,some have suggested that

• A)the head of the central bank be chosen by election.
• B)the central bank implement expansionary monetary policy prior to election years.
• C)elected officials should have a direct influence on the implementation of monetary policy.
• D)all of the above
• E) none of the above

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Definitions:

Peak Times

Periods of high demand or activity within a market or service sector, often leading to higher prices or increased waiting times.

Electric Company

A utility company that generates, transmits, and distributes electricity to consumers and businesses.

Tragedy of the Commons

A situation in which individual users of a shared resource act in their own interest, depleting or degrading the common resource.

Negative Externality

A cost suffered by a third party as a consequence of an economic transaction in which they were not involved.