The Rationale for the Existence of Central Banks Is Mainly

question 103

Multiple Choice

The rationale for the existence of central banks is mainly that:

• A) financial markets lack transparency.
• B) they are needed for the supervision of banks.
• C) financial intermediation cannot occur without a central bank.
• D) financial systems are prone to periods of extreme volatility.

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Definitions:

Confirmation Bias

The tendency to search for, interpret, favor, and recall information in a way that confirms one's preexisting beliefs or hypotheses, while giving disproportionately less consideration to alternative possibilities.

Inaccurate Interpretations

Misunderstandings or wrong conclusions drawn from data, events, or communications, often due to bias, lack of information, or miscommunication.

Understanding

The process of comprehending concepts, situations, or the perspectives of others.

Worldviews

Broad frameworks or sets of beliefs through which individuals interpret the world and their place within it.