Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. - 3127

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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 sacrifice ratio dilemma B.   the monetary policy reaction lag

C.   the time inconsistency of policy

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 th