The time inconsistency problem occurs when
A)all of the following occur
B)expectations are slow to adjust to reality,causing output to vary in the short run
C)public officials' reelection goals generate short-term economic gains at the expense of long-term inflation
D)execution lags are shorter than self-correction lags
E)policy makers execute one type of policy after influencing the public to anticipate another type

Question

Quizplus · Accepted Answer

The time inconsistency problem occurs when all of the following occur: expectations are slow to adjust to reality, causing output to vary in the short run; public officials' reelection goals generate short-term economic gains at the expense of long-term inflation; execution lags are shorter than self-correction lags; and policy makers execute one type of policy after influencing the public to anticipate another type.

The Time Inconsistency Problem Occurs When