Studies in the 1980s and early 1990s showed that, in general, greater central bank independence
A) was associated with lower average inflation.
B) was associated with lower average inflation and higher average real GDP growth.
C) was associated with lower average inflation and higher unemployment.
D) was associated with higher average inflation and higher average real GDP growth.

Question

Quizplus · Accepted Answer

Greater central bank independence was found to be associated with lower average inflation because independent central banks are less likely to be influenced by political pressures to finance government deficits or pursue overly expansionary monetary policies.

Studies in the 1980s and Early 1990s Showed That, in General