Instrument independence is the ability of ________ to set monetary policy ________.

Question

Quizplus · Accepted Answer

Instrument independence refers to the ability of the central bank to choose and use the most appropriate monetary policy instruments to achieve its goals, without interference from the government or any other external influence. Therefore, the best choice is D, which puts the central bank in control of its monetary policy instruments. Choices A, B, and C are incorrect because they either involve Congress, which is not responsible for setting monetary policy, or focus on goals rather than instruments.

Instrument Independence Is the Ability of ________ to Set Monetary