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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

Why have some countries rejected the single currency despite being full members of the European Union?

Compare the structure and independence of the European System of Central Banks and the Federal Reserve System.

The independence of the central bank has meant that it takes the long view and not the short view.” Is this statement true, false, or uncertain? Explain your answer.

How would you argue in favor of the current trend toward central banks’ independence?

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