Governments eventually tried to establish a credible commitment to low inflation by creating independent central banks that tied their hands.

Question

Quizplus · Accepted Answer

This is true, governments did establish independent central banks to commit to low inflation and avoid their interference in monetary policies. These central banks had the authority to set interest rates, control the money supply, and stabilize the economy. Having independent central banks provided better policy credibility and transparency, and helped to control inflationary pressures.

Governments Eventually Tried to Establish a Credible Commitment to Low