Edward Prescott and Finn Kydland won the Nobel Prize in Economics - 8188

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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

 

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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 peo