Monetary Policy and limitations , business and finance homework help
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The time-inconsistency problem is one of the most important ideas in monetary theory in the last twenty years. One can illustrate this problem by using the example of how many people cannot stick to a diet even though they know this is the right thing for them to do in the long run. Another good example is the fact that it is optimal not to give in to children when they are behaving badly, but parents still have a tendency to renege on this optimal plan. A third example is that governments usually provide funds to rebuild in coastal areas after a hurricane, even though it is not optimal to build in areas that are likely to be ravaged again by hurricanes.
Do you think that the achievement of major macroeconomic objectives requires the utilization of the monetary policy along with other policy instruments such as fiscal policy? Why?
Also, why the monetary policy is ineffective in terms of boosting the employment in the presence of structural unemployment?
-min: 3 academic/financial sources in apa
-min: 1 page
-please let me know if there is any questions. thank you
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