The Main Rationale for Central Bank Independence Is That

question 5

Multiple Choice

The main rationale for central bank independence is that

• A)otherwise it would be hard to attract competent people to work for the central bank.
• B)if the central bank were not independent, the government would be too bureaucratic.
• C)in counties like the United States, this independence helps reduce the conflict between state and federal government.
• D)this independence prevents the government from engaging in policies that, though beneficial in the short run, are harmful in the long run.
• E)politicians find monetary policy too boring.

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Definitions:

Approved

An acknowledgment or sanction indicating that something meets required standards, policies, or conditions for acceptance or implementation.

Customary

Established patterns of behavior or practices that are considered accepted and traditional within a particular social, cultural, or professional group.

Bribery

The offering, giving, receiving, or soliciting of something of value as a means of influencing the actions of an individual or group in a position of power.

Illicit Advantage

Obtaining benefits or gains in an illegal or unethical manner, often through unfair practices or insider information.