The two main tools of the monetary policy are:
A)tax rate changes, and the bank rate.
B)open-market operations, and the bank rate & overnight lending rate.
C)tax rate changes, and the changes in government expenditures.
D)changes in government expenditures, and the bank rate.

Question

Quizplus · Accepted Answer

The two main tools of monetary policy are open-market operations and the bank rate (also known as the overnight lending rate). Open-market operations involve buying or selling government securities in order to increase or decrease the money supply, while the bank rate affects the interest rate at which banks can borrow money from the central bank, influencing their lending rates to consumers and businesses. Tax rate changes and changes in government expenditures are tools of fiscal policy, not monetary policy.

The Two Main Tools of the Monetary Policy Are