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Q: 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 sacrifice ratio dilemma C. the time inconsistency of policy D. inflation targeting
A: The answer is C. the time inconsistency of policy
dennis003|Points 382|
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Asked 7/19/2012 4:35:46 PM
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