Edward
Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. One
of their contributions was to argue that if a central bank could
convince people to expect zero inflation, then the Fed would be tempted
to raise output by increasing inflation. This possibility is known as
__________.
A. the monetary policy reaction lag
B. the time inconsistency of policy
C. the sacrifice ratio dilemma
D. inflation targeting
A. the monetary policy reaction lag
B. the time inconsistency of policy
C. the sacrifice ratio dilemma
D. inflation targeting
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