One surprising insight from viewing policy as a "game" is that
A)central bankers should project an image of being conservative on economic policy matters, regardless of their personal views.
B)it is more difficult to control inflation when the central bank is highly independent.
C)uncertainty over the impact of policy makes little difference in designing an optimal policy.
D)money growth has little or no impact on inflation in the long run.
E) decreasing money growth may substantially increase the rate of inflation in the long run.

Question

Quizplus · Accepted Answer

Viewing policy as a "game" suggests that central bankers may choose to project a conservative image on economic policy matters in order to establish credibility and enable the implementation of policies that they believe to be optimal in the long run. This is known as the "time-consistency problem" in game theory.

One Surprising Insight from Viewing Policy as a "Game" Is