If the Central Bank Has Discretion to Make Policy, It

question 10

True/False

If the central bank has discretion to make policy, it may create economic fluctuations that reflect the electoral calendar. This is called the political business cycle.

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Definitions:

Absolute Values

A measure representing the magnitude of a number regardless of its direction or sign, shown as the distance from zero on a number line.

Favorite Bundle

An individual consumer's most preferred combination of goods and services, given their budget and prices.

Indifference Curve

A graph showing different combinations of two goods among which a consumer is indifferent, depicting levels of consumption where the consumer has no preference for one bundle over another.

Absolute Values

Mathematical values expressed without regard to their sign; distances from zero on the real number line.