Question: A monetary policy is said to be credible if the central bank will have an incentive to do tomorrow what it says today that it will do tomorrow. Other policies may be credible or noncredible. Which of the following policies are credible?
a. A student promises to study for the final after going to the frat party.
b. A long established store offers "Guaranteed satisfaction or your money back."
c. A government promises never to bail out banks that take on too much risk and go bankrupt.