Question

In order to control the money supply in the economy, the Central Bank may ____________.


(A) Buy securities in the open market


(B) Sell securities in the open market


(C) Reduce cash reserve ratio

(D) Reduce repo rate​

Answer 1

Answer:

reduce repo rate

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Answer 2

Answer:

The main way central banks control money supply is buying and selling government debt in the form of short term government bonds. Economists call this 'open market operations', because the central bank is selling bonds on the open market. Central banks usually own a big portion of their county's debt.

Explanation:

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