The Ability of a Central Bank to Set Monetary Policy

question 64

Multiple Choice

The ability of a central bank to set monetary policy instruments is

• A)political independence.
• B)goal independence.
• C)policy independence.
• D)instrument independence.

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Definitions:

Compounded Annually

The process where the interest earned in one period is added to the principal sum, and in the next period, interest is earned on the new principal.

Equal Annual Deposits

Regular payments of the same amount made into an account or investment annually.

Semiannual Deposits

Semiannual deposits refer to money deposits made twice a year into a financial account or investment.

Compound Interest

Interest that is computed on both the initial principal amount and the interest that has been added to that principal from past periods of a deposit or loan.