Which statement below is true of central banks?

• A. Central banks are responsible for setting a country's monetary policy.
• B. Central banks only provide loans to individual consumers.
• C. Central banks primarily focus on collecting taxes from citizens.
• D. Central banks are private institutions that operate for profit.

Answer: (A)

Verified step by step guidance

1. Understand the role of central banks in an economy: Central banks are institutions that manage a country's currency, money supply, and interest rates.
2. Recall that central banks are responsible for setting and implementing monetary policy, which involves controlling inflation, managing employment levels, and stabilizing the currency.
3. Recognize that central banks do not provide loans to individual consumers; instead, they typically lend to commercial banks and regulate the banking system.
4. Note that tax collection is the responsibility of government tax agencies, not central banks.
5. Understand that central banks are usually public institutions or government entities, not private profit-driven organizations.