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Part 1
"The strongest argument for an independent Bank of Canada rests on the view that subjecting the Bank of Canada to more political pressures would impart an inflationary bias to monetary policy." Is this statement true, false, or uncertain? Explain.
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Part 1
Select the best answer:
A.
True. Politicians are likely to seek short-run solutions, like increasing the money growth rate in an attempt to combat inflation, to win elections.
B.
False. Politicians understand the inflationary consequences of changing the money supply rate and would be reluctant to adopt this policy as it would likely lead to political suicide.
C.
False. The Bank of Canada is not now, nor ever was, independent.
D.
True. Politicians are likely to seek short-run solutions like decreasing the money growth rate to combat unemployment, in order to win elections.