The "time inconsistency" argument is that a downward shift of the short-run Phillips Curve,which comes about with a ________ of inflationary expectations,is more likely when monetary policy ________.
A)lowering,follows a rigid rule
B)lowering,is at the discretion of policymakers
C)raising,follows a rigid rule
D)raising,is at the discretion of policymakers

Question

Quizplus · Accepted Answer

A downward shift of the short-run Phillips Curve, which indicates lower inflationary expectations, is more likely when monetary policy follows a rigid rule, as it provides consistent and predictable policy actions that help anchor expectations.

The "Time Inconsistency" Argument Is That a Downward Shift of the Short-Run