Final answer:
The answer is A) strongly; strongly, indicating that greater central-bank independence is strongly correlated with both lower and more stable inflation and stable average growth and variability of real GDP.
Step-by-step explanation:
This is supported by economic research which indicates that greater central-bank independence is correlated with lower and more stable inflation, as well as stable average growth and variability of real GDP. It is important to understand that central bank independence allows for monetary policy that is less influenced by political pressures and short-term goals. This autonomy is instrumental in maintaining price stability and avoiding the temptation for governments to use the central bank to fund deficits, which can lead to high inflation.
Central banks like the U.S. Federal Reserve have a tradition of independence, which has historically correlated with positive macroeconomic outcomes. There is an ongoing debate surrounding whether central banks should only focus on inflation or have greater discretion in their policies. However, despite different viewpoints, the overarching insight is that an independent central bank can effectively influence aggregate demand through monetary policy.