Which of the following is the most powerful argument for putting restraints on policy makers (as opposed to self- restraint by policy makers themselves)?
A) Uncertainty about the timing of policy impacts.
B) Uncertainty about the natural rate of unemployment.
C) Time inconsistency.
D) Disagreements about the proper structure of an econometric model.
E) Uncertainty about Okun's coefficient.

Question

Quizplus · Accepted Answer

Time inconsistency refers to the problem that policy makers may have short-term goals that conflict with long-term goals, and may not have the self-restraint to commit to long-term policies. This is the most powerful argument for putting restraints on policy makers, such as rules designed to ensure long-term stability and prevent short-term manipulation for political gain. The other choices are not as directly related to the need for restraints on policy makers.

Which of the Following Is the Most Powerful Argument for Putting