Economic studies conducted in industrially advanced countries suggest there is:

Question

Economic studies conducted in industrially advanced countries suggest there is:
A. A positive relationship between the degree of independence of the central bank and the size of the average annual rate of inflation
B. An inverse relationship between the degree of independence of the central bank and the size of the average annual rate of inflation
C. No relationship between the degree of independence of the central bank and the size of the average annual rate of inflation
D. A positive relationship between the degree of independence of the central bank and the size of the central bank

Explanation / Answer

Answer is option B)

There is inverse relationship exists between central bank independence & the inflation rate.

As main duty of central bank is to keep inflation in control , so greater is freedom to conduct the monetary policy , the more then inflation will be in control

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