Which of the following pairs of tools both have the same effect on the economy?
A) Increasing the reserve requirement and decreasing the discount rate
B) Buying government securities and increasing the discount rate
C) Decreasing the reserve requirement and selling government securities
D) Selling government securities and increasing the reserve requirement
E) Buying government bonds and increasing the reserve requirement

Question

Quizplus · Accepted Answer

Both selling government securities and increasing the reserve requirement are contractionary monetary policy tools that decrease the money supply and increase interest rates. This ultimately leads to a decrease in aggregate demand and a slowing of inflation.

Which of the Following Pairs of Tools Both Have the Same