Question

Countries with more independent central banks have lower inflation rates, but these have come at the expense of greater output fluctuations.

True
False

Answer 1

False

Step-by-step explanation:

Countries with more independent central banks have lower inflation rates, but these have come at the expense of greater output fluctuations is a false statement as we know that, an independent Central Bank could have higher credibility. If somebody has a higher conviction in the Central Bank, this accommodates to subdue inflationary expectations. Indeed, this causes inflation more accessible to keep lowering.