Suppose the president of a newly independent country asks you for advice in designing the country's new central bank. For each of the following design features, choose which one you would recommend:

a. Central bank policy decisions that are irreversible or central bank policy decisions that can be overturned by the democratically elected government.

multiple choice 1

A.) Central bank policy decisions that are irreversible.

B.) Central bank policy decisions that can be overturned by the democratically elected government.

b. The central bank has to submit a proposal for funding to the government each year or the central bank finances itself from the earnings on its assets and turns the balance over to the government.

multiple choice 2

A.) The central bank has to submit a proposal for funding to the government each year.

B.) The central bank finances itself from the earnings on its assets and turns the balance over to the government.

c. The central bank policymakers are appointed for periods of four years to coincide with the electoral cycle for the government or the central bank policymakers are appointed for 14-year terms.

multiple choice 3

A.) The central bank policymakers are appointed for 14-year terms.

B.) The central bank policymakers are appointed for periods of four years to coincide with the electoral cycle for the government.