An opinion column in the Wall Street Journal notes, "In a democracy, the tradeoff for a central bank's independence is accountability to the nation's elected leadership." Source: David Wessel, "Explaining 'Audit the Fed'," Wall Street Journal, February 17, 2015. A country would want to grant its central bank more independence than it grants, say, its department of agriculture or department of education because the central bank O A. controls the money supply, and the more independent the central bank, the lower the likelihood of unemployment. O B. controls the money supply, and the central bank is more important than departments of agriculture or education. OC. controls the money supply, and the more independent the central bank, the lower the likelihood of inflation. O D. relies on other agencies for information in setting policies regarding the money supply. In Canada, how is the Bank of Canada held accountable to the nation's elected leadership? (Select all that apply.) A. The Bank has instrumental independence but not goal independence, meaning that the government has the ultimate responsibility for monetary policy.
An opinion column in the Wall Street Journal notes, "In a democracy, the tradeoff for a central bank's independence is accountability to the nation's elected leadership." Source: David Wessel, "Explaining 'Audit the Fed'," Wall Street Journal, February 17, 2015. A country would want to grant its central bank more independence than it grants, say, its department of agriculture or department of education because the central bank O A. controls the money supply, and the more independent the central bank, the lower the likelihood of unemployment. O B. controls the money supply, and the central bank is more important than departments of agriculture or education. OC. controls the money supply, and the more independent the central bank, the lower the likelihood of inflation. O D. relies on other agencies for information in setting policies regarding the money supply. In Canada, how is the Bank of Canada held accountable to the nation's elected leadership? (Select all that apply.) A. The Bank has instrumental independence but not goal independence, meaning that the government has the ultimate responsibility for monetary policy.
Chapter13: Monetary Policy
Section: Chapter Questions
Problem 7E
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Transcribed Image Text:An opinion column in the Wall Street Journal notes, "In a democracy, the tradeoff for a central bank's independence is accountability to the nation's elected leadership."
Source: David Wessel, "Explaining 'Audit the Fed"," Wall Street Journal, February 17, 2015.
A country would want to grant its central bank more independence than it grants, say, its department of agriculture or department of education because the central bank
A. controls the money supply, and the more independent the central bank, the lower the likelihood of unemployment.
B. controls the money supply, and the central bank is more important than departments of agriculture or education.
C. controls the money supply, and the more independent the central bank, the lower the likelihood of inflation.
D. relies on other agencies for information in setting policies regarding the money supply.
In Canada, how is the Bank of Canada held accountable to the nation's elected adership? (Select all that apply.)
A. The Bank has instrumental independence but not goal independence, meaning that the government has the ultimate responsibility for monetary policy.
B. The Bank has goal independence but not instrumental independence, meaning that the government has the ultimate responsibility for monetary policy.
C. The Bank's board of directors must consist of members of Parliament.
D. The Bank has instrumental independence but not goal independence, meaning that the government has the ultimate responsibility for setting interest rates.
E. The Bank is not held accountable to leadership, since it has both instrumental independence and goal independence.
F. The government appoints and approves members of the Bank's board of directors.
G. The Bank has goal independence but not instrumental independence, meaning that the government has the ultimate responsibility for setting interest rates.
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