Central-bank independence refers to:
A) whether central banks pursue monetary policy by rules or discretion.
B) the situation that occurs when the inside lag of monetary policy is not related to the outside lag.
C) the extent to which automatic stabilizers are relied on to cushion economic volatility.
D) the degree of separation between central-bank decision making and political influence.

Question

Quizplus · Accepted Answer

Central-bank independence refers to the degree of separation between central-bank decision making and political influence. It means that policymakers do not interfere with the decisions made by the central bank's governing board in conducting monetary policy. This ensures that central bankers can focus on achieving their goals of price stability and economic growth without the influence of short-term political considerations.

Central-Bank Independence Refers To