The three main tools of monetary policy are
A) fiat, commodity, and deposit money.
B) open-market operations, reserve requirements, and the refinancing rate.
C) the money supply, government purchases, and taxation.
D) government expenditures, taxation, and reserve requirements.
E) coin, currency, and demand deposits.

Question

Quizplus · Accepted Answer

The three main tools of monetary policy are open-market operations, reserve requirements, and the refinancing rate. Open-market operations involve the purchase and sale of government securities in the open market in order to influence the money supply. Reserve requirements refer to the percentage of deposits that banks are required to hold in reserves, which can be adjusted to affect the amount of money banks can lend out. Finally, the refinancing rate is the interest rate at which banks can borrow from the central bank, and can be adjusted to influence the overall level of interest rates in the economy.

The Three Main Tools of Monetary Policy Are