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The monetary policy tool being used

  • the acquisition of government bonds via the open market
  • a decrease in the number of reserves that are required
  • Increase the amount of money in circulation

This will be discussed in further detail below.

What exactly is a monetary policy tool?

In general, There are four basic monetary instruments that are available to central banks for use in controlling the money supply. The reserve need, open market operations, the discount rate, and interest on excess reserves are the four components that make up this requirement.

Acquisition of government bonds on the open market is the instrument of monetary policy that is now being used. a reduction in the minimum amount of reserves that are necessary Raise the total quantity of money that is currently in circulation.

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