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Chapter 14: Q. 4 (page 387)

In what ways can the national central banks influence the conduct of monetary policy?

Short Answer

Expert verified

Central banks conduct monetary policy by adjusting the supply of money, generally through open market operations.

Step by step solution

01

Concept Introduction

A central bank is a public establishment that deals with the cash of a nation or gathering of nations and control the cash supply - in a real sense, how much cash is available for use. The fundamental goal of numerous central banks is cost security.

02

Explanation

Affecting financing costs, printing money, and setting bank save necessities are generally devices central banks use to control the money supply. Different strategies central banks use incorporate open market tasks and quantitative facilitating, which include selling or purchasing up government securities and protections.

03

Final answer

Central banks are able to clear checks, increase or decrease money supply by selling gov bonds.

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Most popular questions from this chapter

William does not feel comfortable with the current level of the European Central Bank’s independence. Put yourself in William’s shoes and state an argument against the current level of the European Central Bank’s independence.

What are the expected consequences of Brexit for the Bank of England?

Why is the European Central Bank (ECB) governed by three different bodies?

A central bank decides by how much an interest rate should be changed in order to restore equilibrium. What are the tools it uses to take such decisions?

Why might eliminating the central bank’s independence lead to a more pronounced political business cycle?
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