The Concept of Dynamic Inconsistency Implies That a Central Bank

Multiple Choice

The concept of dynamic inconsistency implies that a central bank

A) will always do the wrong thing if it is concerned with long-run outcomes rather than current disturbances
B) should never announce its intentions because doing so renders discretionary monetary policy useless
C) should resist making policy changes that may endanger its stated long-run goals even though these changes could successfully address a short-run problem
D) should always be inconsistent in its behavior so people will be less likely to profit from anticipating its policy actions
E) none of the above