8. Advantages of a less independent central bank include each of the following e

Question

8. Advantages of a less independent central bank include each of the following except: A. More isolation from political pressures B. More accountability of the Board of Governors to the electorate C. Better ability to coordinate monetary and fiseal policy D. All of the above are advantages of a less independent central bank 9. If the Fed wants to counteract a recession it could do so by: A. Selling govemment securities B. Raising the reserve ratio C. Buying govemment securities D. Raising the discount rate E. None of the above

Explanation / Answer

8. A. More isolation from political pressure

Less independent Central Bank brings in more political pressure. It does not isolate the central bank from political pressure. The Board of Governors become more accountable to the electorate. There is greater Government involvement in setting interest rates. Therefore, the bank can co-ordinate monetary and fiscal policy working with the Government.

9. C. buying Government securities

Buying Government securities will increase money supply. This will counteract recession as Government spending will increase. This may increase production and consumption.

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