Finance, Forex and Investments

Should monetary policy be made by an independent central bank? Monetary policy has a lasting effect in Canad?

Should monetary policy be made by an independent central bank? Monetary policy has a lasting effect in Canada, but members of the Bank of Canada's Governing Council are not held directly accountable to elected officials or to the public. The following questions address the costs and benefits of central bank independence. 2.1. Wilson is an economist who favours an independent central bank. He would likely emphasize which of the following arguments? A. There is a negative correlation between central bank independence and inflation rates. B. The public and elected officials should have a say in the conduct of monetary policy. C. An independent central bank eliminates the short-run tradeoff between unemployment and inflation. D. Direct accountability is the first priority of every government institution.

Public Comments

1. Perhaps 'A' is the right answer. When politicians have too much influence over the monetary policy. Then the central bank tends to print too much money to pay for new government programs without raising taxes. And this leads to inflation, which in the long run is bad for economic growth.
2. A-yes, highlights a positive effect of an independent central bank B-no, that's in support of a politically appointed bank C-no, not true D-no, supports a politically appointed bank