Question: Imagine you are advising the leadership of a new, independent country for the design of their central bank. In 1-2 pages, do the following:
1. Describe one benefit and one drawback for each type of central bank design listed below:
o Design 1 - Central bank policy decisions that are irreversible or central bank policy decisions that can be overturned by the democratically elected government.
o Design 2 - 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.
o Design 3 - 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.
2. In 1-2 paragraphs, identify the design you would recommend for this country and why.
3. Be sure to describe any necessary characteristics and assumptions about this country to support your recommendation.
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