Question: Explain why giving an independent central bank control over the quantity of money in the economy should reduce the occurrences of periods of extremely high

Explain why giving an independent central bank control over the quantity of money in the economy should reduce the occurrences of periods of extremely high inflation, especially in developing economies.

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Inflation is a monetary phenomenon and independent central banks are more likely than governments who may be looking for a way to finance spending for example to consider the consequences for inflation when deciding how much money to print Central bank independence may be difficult to maintain in developing economies however if government ... View full answer

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