A policy is time consistent when:
A) policymakers have incentives to adhere to a policy decision made today, in the future.
B) policymakers have incentives to make policy decisions in a time-sensitive fashion.
C) policymakers consider the future when making current policies.
D) the timing of a policy is irrelevant.

Question

Quizplus · Accepted Answer

A time-consistent policy is one where policymakers have incentives to adhere to a policy decision made today, in the future. This means that the policy decision remains in place even as circumstances change over time. It is important for policymakers to consider the long-term implications of their decisions and remain committed to them over time. Time inconsistency in policy can lead to instability, uncertainty, and unpredictability in the economy.

A Policy Is Time Consistent When