When the Central Bank Pursues Expansionary Monetary Policy and All

Multiple Choice

When the central bank pursues expansionary monetary policy and all other economic agents build this into their decision making, ________ with no economic benefit; this is called the ________ problem.

A) output rises; policy lag
B) unemployment rises; time inconsistency
C) expectations rise; adaptive expectations
D) inflation rises; time inconsistency
E) inflation rises; discretionary