A time-inconsistent monetary policy is one that:
A)is set by congressional decree.
B)is based on monetary targets established by law.
C)changes over time as economic conditions change.
D)follows a zero percent inflation rate.
E)does not adapt to changing economic conditions.

Question

Quizplus · Accepted Answer

A time-inconsistent monetary policy changes over time as economic conditions change. This means that it may be set with a certain goal in mind, but as time passes, the goals and priorities may shift due to changing economic conditions. This can lead to inconsistency in policy decisions, as the original goals may no longer be relevant or feasible.

A Time-Inconsistent Monetary Policy Is One That