The Main Rationale for Central Bank Independence Is That

question 5

Multiple Choice

The main rationale for central bank independence is that

• A)otherwise it would be hard to attract competent people to work for the central bank.
• B)if the central bank were not independent, the government would be too bureaucratic.
• C)in counties like the United States, this independence helps reduce the conflict between state and federal government.
• D)this independence prevents the government from engaging in policies that, though beneficial in the short run, are harmful in the long run.
• E)politicians find monetary policy too boring.

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Definitions:

Selling Price

The price at which goods or services are offered to consumers.

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent or salaries.

Variable Expenses

Expenses that vary in direct proportion to changes in an activity or production level, similar to variable costs.

Fixed Costs

These are expenses that do not change with changes in the production volume or sales, such as rent, salaries, and insurance.