Recall Application 2, "Increased Political Independence for the Bank of England Lowered Inflation Expectations," to
answer the following questions:
-According to the application, there is evidence that supports the conjecture that:
A) more central bank independence is associated with lower inflation.
B) less central bank independence is associated with lower inflation.
C) more central bank independence is associated with higher real GDP.
D) less central bank independence is associated with higher real GDP.

Question

Quizplus · Accepted Answer

The application provides evidence that increased political independence for the Bank of England, which implies more central bank independence, led to lower inflation expectations. This supports the conjecture that more central bank independence is associated with lower inflation.