A situation in which the government cannot implement an optimal tax policy because the policy is inconsistent with the government's incentives over time is known as
A)government tax problem.
B)Arrow's impossibility theorem.
C)the double dividend effect.
D)time inconsistency of optimal policy.

Question

Quizplus · Accepted Answer

Time inconsistency of optimal policy refers to situations where a policy that is optimal at one point in time becomes suboptimal due to changes in incentives or circumstances, leading the government to deviate from the original plan.

A Situation in Which the Government Cannot Implement an Optimal