The Ability of a Central Bank to Set Monetary Policy

question 12

Multiple Choice

The ability of a central bank to set monetary policy goals is

• A)political independence.
• B)goal independence.
• C)policy independence.
• D)instrument independence.

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Definitions:

Median-Voter Model

The theory that under majority rule the median (middle) voter will be in the dominant position to determine the outcome of an election.

Economically Efficient

Refers to a situation where resources are allocated in the most effective way, maximizing production while minimizing waste and inefficiency.

Dollar Voting

Dollar voting is the concept where consumers influence market trends and production decisions through the choices they make with their spending.

Competitive Markets

Markets characterized by many buyers and sellers where no single participant has significant influence over market prices.