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To solve the "time inconsistency" problem in macro policy a nation may well have to A
To solve the "time inconsistency" problem in macro policy a nation may well have to
A. make the central bank more responsive to the popular will.
B restrict itself in the present from taking certain policy moves in the future
C use the courts to settle policy disputes.
D present policy moves to the public, for example, in a referendum.
E. lift all restrictions on future policy moves.
Expert Solution
To solve the "time inconsistency" problem in macro policy a nation may well have to B restrict itself in the present from taking certain policy moves in the future
Explanation:
Time inconsistency refers to a situation where a policymaker focuses on future policies in advance and is later forced to change them in the future. This happens due to uncertainties arising from the dynamism of change in society. In macroeconomics, policymakers should decide policies according to the current scenario instead of future possibilities. They should restrict themselves to make policies for the future as the world changes gradually.
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