A situation in which the government cannot implement an optimal tax policy because the policy is inconsistent with the government's incentives over time is known as
A) government tax problem.
B) time inconsistency of optimal policy.
C) the double-counting game.
D) Wagner's Law.

Question

Quizplus · Accepted Answer

Time inconsistency of optimal policy refers to a situation where the optimal policy today is not optimal in the future due to changes in incentives or preferences. This can lead to suboptimal outcomes and is a common problem in taxation policy. The other options are either not relevant to the context or do not accurately describe the situation.

A Situation in Which the Government Cannot Implement an Optimal