The ability to control inflation expectations is most closely related to a central bank's:

Question

Quizplus · Accepted Answer

A central bank's credibility is its ability to convince the public that it will follow through on its stated policies. If the public trusts that the central bank will take the necessary actions to keep inflation under control, they will adjust their expectations accordingly, which can lead to lower inflation. This is why a central bank's credibility is closely related to its ability to control inflation expectations. Transparency, accountability, and communication are also important for building credibility, but they are not as directly related to controlling inflation expectations.

The Ability to Control Inflation Expectations Is Most Closely Related