Question

There are three major tools of monetary policy applied by the central bank to control the supply of money. By keeping in mind the current economic condition of Pakistan suggest only one most suitable tool of monetary policy for the economy of Pakistan. Also, justify the suggested tool with logical arguments.​

Answer 1

Answer:

The Fed uses three main instruments in regulating the money supply: open-market operations, the discount rate, and reserve requirements. ... The second tool is the discount rate, which is the interest rate at which the Fed (or a central bank) lends to commercial banks

Answer 2

Answer:

Key Takeaways. Central banks have four primary monetary tools for managing the money supply. These are the reserve requirement, open market operations, the discount rate, and interest on excess reserves. These tools can either help expand or contract economic growth.

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