People Know That the Fed Has the Incentive to Announce

Multiple Choice

People know that the Fed has the incentive to announce that the inflation rate will be 3 percent next year, so people will build 3 percent inflation into their wage negotiations.But then the Fed has the incentive to increase inflation above 3 percent to make the economy grow faster.This type of phenomenon is known as

A) inflation targeting.
B) time inconsistency.
C) McCallum's rule.
D) an expectations trap.