The credibility of an anti-inflation announcement depends on
A) the independence of the central bank.
B) past behavior of the central bank.
C) government budget deficits.
D) all of the above.

Question

Quizplus · Accepted Answer

The credibility of an anti-inflation announcement depends on multiple factors: the independence of the central bank ensures it can make decisions without political pressure, past behavior of the central bank establishes a track record that can either support or undermine its current statements, and government budget deficits can influence inflation and thus affect the perceived effectiveness and sincerity of anti-inflation measures.

The Credibility of an Anti-Inflation Announcement Depends on