
The case for Federal Reserve independence does not include the idea that
A) political pressure would impart an inflationary bias to monetary policy.
B) the principal-agent problem is perhaps worse for the Fed than for congressmen since the former does not answer to the voters on election day.
C) a politically insulated Fed would be more concerned with long-run objectives and thus be a defender of a sound dollar and a stable price level.
D) a Federal Reserve under the control of Congress or the president might make the so-called political business cycle more pronounced.
Correct Answer:
Verified
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A)
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