The time inconsistency problem means that policy makers are always tempted to pursue ________ policy in the short run.

Question

Quizplus · Accepted Answer

The time inconsistency problem is the tendency of policy makers to prioritize short-term benefits over long-term goals. Therefore, they are more likely to pursue expansionary policies in the short run, even if it leads to higher inflation and other negative consequences in the long run.

The Time Inconsistency Problem Means That Policy Makers Are Always