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:

Logrolling

Logrolling involves the exchange of favors, especially in politics, by reciprocal voting for each other's proposed legislation.

Highly Preferred Outcome

A result or conclusion that is significantly favored or desired over other possible outcomes.

Integrative Agreements

Negotiation outcomes that involve creative solutions allowing all parties to achieve their objectives, often leading to mutual benefits.

Objective Outcomes

The measurable, tangible results achieved from an action or process, which can be observed and quantified.