Which of the following statements is true?
A)Central bank independence guarantees that central banks won't make more mistakes than they would if they were not independent.
B)Central bank independence guarantees that the central bank will always pursue price stability.
C)Independent central banks do not need to be held accountable for their actions.
D)Central bank independence can be taken too far.
E)Central banks should pursue the goal of price stability at all costs.

Question

Quizplus · Accepted Answer

While central bank independence can be beneficial for ensuring price stability, it is possible for it to be taken too far. If a central bank is too independent, it may not be held accountable for its actions and may pursue policies that don't align with the overall goals of the economy. Therefore, it is important to strike a balance between central bank independence and accountability. The other statements are not entirely true – central bank independence does not guarantee that central banks won't make mistakes or that they will always pursue price stability. Additionally, pursuing price stability at all costs may not be the best approach in all economic situations.

Which of the Following Statements Is True