Countries with greater central-bank independence can achieve lower rates of inflation:
A) at the cost of higher levels of unemployment.
B) at the cost of slower growth rates of real GDP.
C) at the cost of greater volatility of real GDP.
D) with no apparent real economic costs.

Question

Quizplus · Accepted Answer

Studies have shown that there are no significant real economic costs associated with greater central bank independence as long as it is accompanied by a clear mandate for price stability. In fact, greater central bank independence can lead to more stable and predictable inflation rates, which can support long-term economic growth.

Countries with Greater Central-Bank Independence Can Achieve Lower Rates of Inflation