Which of the Following Policies Is Likely to Enhance a Central

question 37

Multiple Choice

Which of the following policies is likely to enhance a central bank's credibility?

• A) announce inflation targets.
• B) appoint inflation doves as central bankers.
• C) make the central bank obligated to finance the national deficit.
• D) appoint central bankers for short terms that coincide with those in the legislative and executive branches of government.

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Definitions:

Tax Regulations

Comprise the laws and rules governing how taxes are assessed, collected, and managed by governmental entities.

Favorable Tax Treatment

Tax policies or practices that are advantageous to businesses or individuals, reducing the amount of tax they have to pay.

Noncontributory

Pertains to employee benefit plans where the employer bears the full cost of the benefits without requiring financial contributions from employees.

Employer Contributes

Refers to the financial or resource input made by an employer towards employee benefits, retirement plans, insurance, or other compensatory mechanisms.