Question

review question (drag circle to correct answer) which of the following tools allows central banks to directly increase or decrease the money supply? a. discount rate b. reserve requirement c. open market operations d. quantitative easing

Explanation:

Open - market operations involve the central bank buying or selling government securities. When the central bank buys securities, it injects money into the economy, increasing the money supply. When it sells securities, it withdraws money, decreasing the money supply. The discount rate affects the cost of borrowing for banks, the reserve requirement affects the amount of money banks can lend, and quantitative easing is a more long - term and large - scale version of open - market operations but not as direct in day - to - day money supply changes as open - market operations.

Answer:

C. Open market operations