Question

State and explain the tools of monetary policy that may be used by a government to reduce excess money in circulation. 

Answer 1

1. Open markets operations vie selling of government securities through commercial central banks.

2. Raising interest rates of loans to banks and financial institutions across the country.

3. Government directives to commercial banks to charge higher interest rates on loans.

4. Raising marginal requirements such as stocks and securities to loans throgh selective credit control.

open market operations, banking rates, directives and raising margin requirements.