Which is NOT a desirable feature of a central bank? transparency independence from political influence direct control by the federal government decision-making by committee
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Step 1: A central bank should be independent from political influence to ensure that monetary policy decisions are made based on economic considerations rather than political expediency. Show more…
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Which of the following statements is CORRECT? The Fed's actions are subject to executive branch control. Politically controlled banks are better at fighting inflation than are independent central banks. The Federal Reserve is considered to be an independent central bank. The Federal Reserve System is not subject to Congressional oversight.
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In his memoirs, Alan Greenspan wrote, "I regret to say that Federal Reserve independence is not set in stone. FOMC discretion is granted by statute and can be withdrawn by statute." (The Age of Turbulence, p. 478 f.) Explain why the independence of a central bank might affect the way in which monetary policy is conducted. If a central bank is not independent, how might its monetary policies change in response to electoral pressures? Would you recommend that a new country have an independent central bank? Explain.
Those who argue that central banks should be independent from the government argue this because: a)Independence makes central banks more democratic and accountable directly to the public. b)Independence gives the central bank's inflation targets more stability and credibility. c)Independence encourages central banks to focus more on unemployment, instead of inflation. d)Independence encourages central bankers to focus more on short-term policy goals and less on long-term goals.
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