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The Case for Federal Reserve Independence Does Not Include the Idea

Question 41

Multiple Choice
The case for Federal Reserve independence does not include the idea that

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.

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