The Case for Federal Reserve Independence Does Not Include the Idea

question 30

Multiple Choice

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

• A) political pressure would impart an inflationary bias to monetary policy.
• B) 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.
• C) policy is always performed better by an elite group such as the Fed.
• 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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