The time-inconsistency problem involves the ________.
A)difficulties of traveling across time zones
B)tendency to deviate from good long-run plans in the short-run
C)use of adaptive expectations in building an economic model
D)time lag between the implementation of policy and its ultimate and complete results

Question

Quizplus · Accepted Answer

The time-inconsistency problem refers to the tendency of policymakers to deviate from their good long-run plans in the short-run due to various reasons such as political pressure or personal goals, which can lead to suboptimal outcomes in the long run. It is a key concept in behavioral economics and has implications for monetary policy and other forms of government intervention in the economy.

The Time-Inconsistency Problem Involves the ________