The Case for Bank of Canada Independence Does Not Include

question 72

Multiple Choice

The case for Bank of Canada independence does not include the idea that ________.

• A) political pressure would impart an inflationary bias to monetary policy
• B) a politically insulated Bank would be more concerned with long-run objectives and thus be a defender of a sound dollar and a stable price level
• C) a Bank of Canada under the control of the government might make the so-called political business cycle more pronounced
• D) the principal-agent problem is perhaps worse for the Bank of Canada than for politicians since the former does not answer to the voters on election day