Policymakers Will Find It Easier to Achieve Their Goals by Sticking

question 12

Multiple Choice

Policymakers will find it easier to achieve their goals by sticking to policy rules rather than discretion if they face the problem of:

• A) very short policy lags.
• B) adaptive expectations.
• C) time inconsistency.
• D) discretionary fiscal policy.
• E) a weak central bank.

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Definitions:

Annuity

A series of equal payments at regular intervals.

Semi-Annual Payments

Payments made twice a year, often used in the context of loans, bonds, or other financial instruments.

Perpetuity

An annuity that pays a constant sum to an individual indefinitely, often used as a theoretical model in finance.

Semi-annually

A term used to describe something that occurs or is done twice a year.