ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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monetary policy
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fiscal policy
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adjusting the reserve requirement
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decreasing income taxes consumers have to pay
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preparing US budget
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Detailed explanation-1: -Central banks conduct monetary policy by adjusting the supply of money, usually through buying or selling securities in the open market.
Detailed explanation-2: -The Reserve Bank of India (RBI) controls the supply of money and bank credit. Government securities are purchased and sold in the open market by the RBI to control money supply.
Detailed explanation-3: -Conducting monetary policy The basic approach is simply to change the size of the money supply. This is usually done through open-market operations, in which short-term government debt is exchanged with the private sector.
Detailed explanation-4: -By lowering the reserve requirements, banks are able to loan more money, which increases the overall supply of money in the economy. Conversely, by raising the banks’ reserve requirements, the Fed is able to decrease the size of the money supply.