The monetary policy tool that involves the buying and selling of government bonds is
A) moral suasion.
B) reserve requirements.
C) the discount rate.
D) open-market operations.

Question

Quizplus · Accepted Answer

Open-market operations involve the buying and selling of government bonds by a central bank, which can help to adjust the money supply and influence interest rates. Moral suasion refers to the use of persuasion or influence by a central bank to encourage certain behaviors or actions by banks and other financial institutions. Reserve requirements involve setting a minimum amount of reserves that banks must hold against certain types of deposits. The discount rate is the interest rate at which banks can borrow from the central bank. While all of these tools can be used to implement monetary policy, the buying and selling of government bonds through open-market operations is a key tool that is often used by central banks.

The Monetary Policy Tool That Involves the Buying and Selling