Advocates of Bank of Canada independence fear that subjecting the Bank to direct government control would ________.

Question

Quizplus · Accepted Answer

Both options B and C are potential consequences of subjecting the Bank of Canada to direct government control. Option B refers to the possibility that the government may prioritize short-term goals, such as maximizing employment or stimulating economic growth, over the long-term goal of price stability. Option C refers to the risk that politicians may manipulate monetary policy to gain electoral advantage, exacerbating the already existing "political business cycle" phenomenon. Thus, both options B and C highlight the potential dangers of removing the Bank's independence. Option A is not relevant to this question, as it does not concern the effects of government intervention on the Bank's autonomy.

Advocates of Bank of Canada Independence Fear That Subjecting the Bank