Asked by Latroy Mayfield on Jun 13, 2024
Verified
The most frequently used tool of monetary policy is
A) the discount rate.
B) reserve requirements.
C) open market operations.
D) moral suasion.
E) credit controls.
Open Market Operations
The purchase and sale of government securities by a central bank to control the money supply and interest rates.
Monetary Policy
Actions undertaken by a country's central bank to control the money supply and interest rates to achieve macroeconomic objectives like controlling inflation, consumption, growth, and liquidity.
Discount Rate
The rate of interest that central banks impose on credits extended to commercial banks and other financial entities.
- Understand the impact of open market operations on the economic landscape.
Verified Answer
OS
Onita SkinnerJun 20, 2024
Final Answer :
C
Explanation :
Open market operations, which involve the buying or selling of government securities by the central bank, are the most frequently used tool of monetary policy. This allows the central bank to influence the supply of money and credit in the economy. The discount rate, reserve requirements, moral suasion, and credit controls are also used by central banks, but to a lesser extent.
Learning Objectives
- Understand the impact of open market operations on the economic landscape.