Author Question: The tendency to deviate from sound long-run plans in the short-run is known as ________. A) the ... (Read 61 times)

audie · **on:** Jun 30, 2018

The tendency to deviate from sound long-run plans in the short-run is known as ________.

A) the failure of adaptive expectations
B) the failure of rational expectations
C) the time inconsistency problem
D) the NIMBY, or not in my backyard problem

Question 2

Why did banks increase their holdings of excess reserves during the Financial Crisis of 2007-2009?

What will be an ideal response?

kaykay69 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

C

Answer to Question 2

Given the historically high level of uncertainty in the financial system, many banks wanted to increase their liquidity. Also, the Fed started to pay interest on excess reserves.