Central banks are in a position to control risk in the economy because they:

Question

Quizplus · Accepted Answer

Central banks control short-term interest rates through monetary policy tools, such as open market operations or adjusting reserve requirements. By raising or lowering interest rates, they can influence borrowing and spending in the economy, which can impact inflation, employment, and economic growth. However, they do not have direct control over taxes and only have limited influence over the real growth rate of the economy.

Central Banks Are in a Position to Control Risk in the Economy