The Original Phillips Curve Argued That There Was a Long-Run
The original Phillips curve argued that there was a long-run tradeoff between inflation and unemployment.
Because of its devastating effects, the temptation to use monetary policy for short-run gain is easy to resist for governments around the world.
Which of the following statements is true?
A) Central bank independence guarantees that central banks won't make more mistakes than they would if they were not independent.
B) Central bank independence guarantees that the central bank will always pursue price stability.
C) Independent central banks do not need to be held accountable for their actions.
D) Central bank independence can be taken too far.
E) Central banks should pursue the goal of price stability at all costs.
Which of the following best explains why independent central banks need to be held accountable?
A) Central banks are used to serving politicians.
B) They would not otherwise be able to pursue the goal of price stability.
C) Central bank independence can be taken too far.
D) Central banks are prone to causing political business cycles.
E) Central banks do not understand political issues.