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The Government of Montesia Had Announced That It Would Keep

Question 93

Multiple Choice

The government of Montesia had announced that it would keep its money supply unchanged in 2010. However, in 2011, the money supply increased, thereby ruining public expectations. This led to _____


A) an implementation lag.
B) policy credibility.
C) a time-inconsistency problem.
D) the development of rational expectations.
E) a recognition lag.

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