Time-inconsistency in monetary policy is most likely to create
A) long information lags
B) long decision lags
C) long implementation lags
D) low credibility
E) low sacrifice ratios

Question

Quizplus · Accepted Answer

Time-inconsistency in monetary policy refers to a situation where policymakers deviate from their announced policy in the future to pursue short-term goals. This creates low credibility, as the public doubts the policymakers' commitment to their stated long-term goals.

Time-Inconsistency in Monetary Policy Is Most Likely to Create