Which of the following statements concerning an independent central bank are true?
A) Politicians may prefer an independent central bank, as it can be used as a "whipping boy" or "scapegoat" for poor economic performance.
B) Politicians in a democratic society may be shortsighted because of their desire to win reelection; thus, the political process may generate a political business cycle, in which just before an election contractionary policies are pursued to raise unemployment and interest rates.
C) Putting the Bank of Canada under control of the government may place too much pressure on the Bank of Canada to finance federal budget deficits, thereby imparting an inflationary bias to monetary policy.
D) Only A and C of the above are true statements.
Correct Answer:
Verified
Q44: The political business cycle refers to the
Q61: The strongest argument for an independent Bank
Q63: The oldest central bank,having been founded in
Q77: Advocates of Bank of Canada independence fear
Q78: Supporters of the current system of Bank
Q80: The case for Bank of Canada independence
Q81: According to the author of your textbook,the
Q84: Which of the following are entities of
Q85: Which of the following are entities of
Q96: The theory of bureaucratic behavior suggests that
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents