Outline four tools of monetary policy that a government may use to reduce excess money in circulation

      

Outline four tools of monetary policy that a government may use to reduce excess money in circulation

  

Answers


Davis
(a) Open market operations - to sell government securities through the
Central Bank.
(b) Bank rate - raising interest rate on loans to banks.
(c) Cash/Liquidity ratio can be raised for commercial bank
(d) Directives - can be given to commercial banks to reduce money supply.
(e) Raising margin requirement - raise the value of assets required as security for
loans.
(f) Selective credit control - freeze lending to some sectors of the economy
Githiari answered the question on September 23, 2017 at 10:26


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