Political Scientists and Economists Argue That Truly Autonomous Central Banks

question 59

Multiple Choice

Political scientists and economists argue that truly autonomous central banks that are subject to minimal political influence are more likely to be:

• A) less credible in their fight against inflation.
• B) more credible in their attempts in reviving a troubled economy.
• C) more credible in their fight against inflation.
• D) less credible in their fight against unemployment.

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Definitions:

Discount Rate

The interest rate charged by the Federal Reserve to depository institutions.

Federal Reserve

The Federal Reserve is the central bank of the United States, responsible for implementing the country's monetary policy, regulating banks, maintaining financial system stability, and providing financial services.

Monetary Growth

The increase in the money supply in an economy over time, which can influence inflation rates, interest rates, and economic growth.

Open Market Operations

The buying and selling of government securities by a central bank to control the money supply and interest rates.