Why is it important for the central bank of a country to be independent? (i) The central bank needs to be free from political pressures. (ii) Research has shown that inflation tends to be lower where central banks have greater independence. (iii) The central bank needs to ensure that it has the freedom to set the federal funds rate at one fixed level. (iv) The central bank needs to ensure that the Federal Reserve governor never has to testify before Congress. (i) and (ii) (ii) and (iv) (ii) and (iii) (i), (iii), and (iv)
Why is it important for the central bank of a country to be independent? (i) The central bank needs to be free from political pressures. (ii) Research has shown that inflation tends to be lower where central banks have greater independence. (iii) The central bank needs to ensure that it has the freedom to set the federal funds rate at one fixed level. (iv) The central bank needs to ensure that the Federal Reserve governor never has to testify before Congress. (i) and (ii) (ii) and (iv) (ii) and (iii) (i), (iii), and (iv)
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter28: Monetary Policy And Bank Regulation
Section: Chapter Questions
Problem 37CTQ: Is it preferable for central banks to primarily target inflation or unemployment? Why?
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