Why is it important that the central bank be independent, or insulated from changes in political power?

What will be an ideal response?


If the central bank is independent, politicians cannot easily put pressure on the central bank to change monetary policies to benefit the party in power. This is important because monetary policies that benefit the party in power are not necessarily beneficial for the economy as a whole.

Economics

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Economics

A country possesses a comparative advantage in the production of a product if

A) the opportunity cost, in terms of the amount of other products that it gives up to produce this product, is lower than it is for its trading partners. B) it possesses an absolute advantage in the production of this good compared to its trading partners. C) it is able to produce less of this good per worker than its trading partners. D) it can produce more of this good per hour than its trading partners.

Economics

A tax cut designed to encourage investment and stimulate economic growth

a. must be matched by a cut in government spending in order to be effective b. must be matched with tax increases in other areas, or with a cut in government spending, if crowding out is to be avoided c. will only work if it decreases the size of the budget deficit d. can only be effective if the tax burden is redistributed or government spending is cut e. will only work if it is a cut in the capital gains tax

Economics

What is a market demand curve?

a. a table showing how much of a product an individual is willing and able to buy b. a table showing how much of a product a market is willing and able to buy c. a graph showing how much of a product an individual is willing and able to buy d. a graph showing how much of a product a market is willing and able to buy

Economics