Empirical evidence suggests which of the following about central bank independence and inflation rates?
A) More independent central banks are associated with lower rates of inflation.
B) More independent central banks are associated with constant rates of inflation.
C) More independent central banks are associated with higher rates of inflation.
D) There is no observable relationship between inflation rates and central bank independence.

Question

Quizplus · Accepted Answer

Empirical evidence suggests that more independent central banks are associated with lower rates of inflation. This is because when central banks have independence, they are able to make monetary policy decisions based on economic indicators and not subject to political pressure or influence. This enables them to make decisions that are in line with maintaining price stability, which can lead to lower inflation rates.

Empirical Evidence Suggests Which of the Following About Central Bank