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

Question

Quizplus · Accepted Answer

Central banks can control risk in the economy by adjusting short-term interest rates. By raising or lowering interest rates, they can influence borrowing, spending, and investment, which in turn can affect inflation, employment, and economic growth. Central banks do not directly control the unemployment rate, economy's real growth rate, or taxes.

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