Question

A central bank would like to increase the money supply in the country. It
achieves this by buying treasury securities from investors who had purchased
them earlier. Investors who sell their securities now have more money on
hand to invest in businesses.
This action best illustrates the central bank's use of which tool of monetary
policy?
A. Open market operations
B. Reserve requirements
C. Discount rate
D. Interest on reserves

Answer 1

Answer:

A) Open Market Operations

Explanation:

I just got it right

Answer 2

Open market operations action is best illustrates the central bank's use of which tool of monetary policy. Thus, option (a) is correct.

What is investors?

Anyone who makes investments in a business, organization, or piece of real estate is referred to as a “investor.” Shares of corporations, bonds, and debentures are frequently bought by investors.

A central bank implements monetary policies by expanding the money supply through open market transactions. They affect central bank reserve balances and moderate changes to regularly occurring interest rates.

Therefore, option (a) open market operations is correct.

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