When the central bank pursues expansionary monetary policy and all other economic agents build this into their decision making, ________ rise(s) with no economic benefit; this is called the ________ problem.
A) output; policy lag
B) unemployment; time inconsistency
C) expectations; adaptive expectations
D) inflation; time inconsistency
E) inflation; discretionary

Question

Quizplus · Accepted Answer

When the central bank pursues expansionary monetary policy and all other economic agents build this into their decision making, inflation rises with no economic benefit. This is called the time inconsistency problem.

When the Central Bank Pursues Expansionary Monetary Policy and All