Final answer:
The correct option is c. I partially agree that closeness between the central bank and the ministry of finance could be viewed with suspicion, as a central bank's independence is crucial for objective decision-making and inflation control. Yet, coordination between fiscal and monetary policy is necessary at times, advocating for a balance between independence and cooperation.
Step-by-step explanation:
I would say that I partially agree with the statement that any closeness of the central bank to the ministry of finance would be perceived as unfair and as the government's baby. The relationship between the central bank and the government is a complex issue that is debated in economic circles. While monetary policy independence is often hailed as crucial for the control of inflation and for maintaining a focus on long-term economic goals without political pressure, it is also true that a certain level of coordination between fiscal and monetary policy can be beneficial, and the central bank, while independent, should still be accountable.
In the case of an independent central bank, there are significant advantages. Such a bank can make decisions that are shielded from political influence, which can be essential during times of economic stress. This insulation from the day-to-day politics allows the bank to set monetary policies more objectively. Proponents argue that without independence, there is a risk of excessive money creation by lawmakers, leading to rampant inflation, a situation not in the long-term interest of the economy.
However, economic agendas and related objectives sometimes require coordination between a nation's fiscal and monetary policies, which means the ministry of finance and central bank would need to work in tandem. An overly isolated central bank might not effectively support government economic policies or may fail to respond adequately in a crisis that requires fiscal and monetary coordination. This calls for a balance between independence and cooperation, making this relationship a delicate one.