Economists Consider Central Bank Independence to Be a Key Factor

question 2

Multiple Choice

Economists consider central bank independence to be a key factor in keeping inflation under control. Why?

• A) Elected officials (legislators and the executive branch) tend to pursue policies popular with the public that may increase inflationary tendencies, whereas the Central Bank does not have such pressure.
• B) The central bank should be able to use stimulative monetary policy whenever it chooses without worrying about inflationary tendencies.
• C) Inflation is generated by legislative deficit spending-the central bank can offset that spending and the inflation it causes.
• D) The central bank's directors and executives are always political appointees, and it is clear that low inflation is popular with the public.

---

Definitions:

Blood Type

A classification of blood based on the presence or absence of inherited antigenic substances on the surface of red blood cells.

Immune System

The complex network of cells, tissues, and organs that works together to defend the body against pathogens.

Red Blood Cell

Erythrocyte; contains hemoglobin and carries oxygen from the lungs or gills to the tissues in vertebrates.

Fluid-Mosaic

A model describing the structure of cell membranes, where various proteins float in or on the fluid lipid bilayer like boats on a pond.