Respuesta :
Answer: The answer is B
Explanation:
Explanation: Monetary policy is the instrument used by the apex bank in any country to regulate the economy. Example Federal Reserve, it includes the following monetary policy instruments
Open market operation :This involves the buying and selling of securities from and to commercial banks in order to increase or reduce the volume of money in circulation.in other words to mop up excess liquidity in the economy.
Bank rate: This is also known as discount rate, it is the rate of interest the central bank charges commercial banks and other financial institutions for discounting their bill.if the central bank want to reduce the lending powers of commercial bank and other financial institutions it will raise the discount rate which will force other rates to rise
Special deposit: This is an instruction from the central bank asking the commercial banks to keep with it special deposit over and above their statutory requirements.
Cash reserve or cash ratio: This is also known as liquidity ratio . In this case, the commercial banks are required by law to keep certain percentage of their total cash with the central bank.
Special directives: These are special instructions which the central bank gives to commercial banks as to which directions their lending policies should follow.
Moral suasion: This is based on moral grounds not with the use of force of law by the central bank on the kind of lending policy they should adopt regarding the expansion or contraction of money supply.
Answer:
Financial institutions must keep a percentage of deposits on hand.
The Federal Reserve can buy or sell government bonds in the open market.
The Federal Reserve pays institutions interests on excess reserves.
A “discount rate” is applied to loans taken out by institutions with the Federal Reserve.
Explanation:
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