Time Inconsistency problem

 

 

 

 

 

1. State ‘True’ or ‘False’ and explain why. (Full credit is given if the explanation is correct)
a. A central bank can maintain fixed exchange rate while targeting inflation.
b. US Federal Reserve system has a hierarchical mandate on achieving its goals.
c. US Federal Reserve targets headline inflation
d. US Federal reserve follows a monetary policy rule
e. Time Inconsistency problem occurs when a central bank uses discretionary policy.

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