The two policy tools the Reserve Bank uses to influence the interest rate and regulate the amount of money circulating in the economy are
A) setting the cash rate and the market interest rate.
B) credit easing and setting the required reserve ratio.
C) open market operations and setting the cash rate.
D) open market operations and setting tax rates.
E) open market operations and setting the excess reserve ratio.

Question

Quizplus · Accepted Answer

The Reserve Bank uses open market operations (buying and selling government securities) and setting the cash rate (the interest rate on overnight loans in the money market) as its primary tools to influence the interest rate and regulate the amount of money circulating in the economy.

The Two Policy Tools the Reserve Bank Uses to Influence