C d. lower the discount rate and sell bonds. QUESTION 52 1 p Edward Prescott and Finn Kydland won the Nobel Prize in Economics in 2004. One of their contributions was to argue that if a central bank could convince people to expect zero inflation, then the Fed would be tempted to raise output by increasing inflation. This possibility is known as a. the monetary policy reaction lag. b. inflation targeting. OOOO c. the sacrifice ratio dilemma. d. the time inconsistency of policy. QUESTION 53