An inflation-prone country

Question

Quizplus · Accepted Answer

An inflation-prone country gains from vesting its monetary policy decisions with a "conservative" central bank because this type of central bank is typically more focused on maintaining price stability and controlling inflation through measures such as raising interest rates. This can help to prevent inflation from spiraling out of control. Conversely, a central bank that is more focused on promoting economic growth may be more inclined to pursue expansionary monetary policies that could exacerbate inflationary pressures. Therefore, a "conservative" central bank can help to limit inflation in an inflation-prone country.

An Inflation-Prone Country