Which of the Following Statements Concerning an Independent Central Bank

question 27

Multiple Choice

Which of the following statements concerning an independent central bank are true?

• A) Politicians may prefer an independent central bank, as it can be used as a "whipping boy" or "scapegoat" for poor economic performance.
• B) Politicians in a democratic society may be shortsighted because of their desire to win reelection; thus, the political process may generate a political business cycle, in which just before an election contractionary policies are pursued to raise unemployment and interest rates.
• C) Putting the Bank of Canada under control of the government may place too much pressure on the Bank of Canada to finance federal budget deficits, thereby imparting an inflationary bias to monetary policy.
• D) A and C only

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Definitions:

McGrath

Could refer to Joseph Edward McGrath, a social psychologist known for his work on small groups and team dynamics.

Monitoring/Internal

The process of continuously checking, tracking, or verifying activities or systems for compliance with standards or plans, often referenced in the context of internal controls or supervision.

External Leadership Actions

Activities and initiatives undertaken by leaders outside of their immediate team or organization, influencing wider stakeholders and environments.

Environmental

Relating to the natural world and the impact of human activity on its condition.