question archive Which of the following policies will reduce inflation most effectively? Open Market Operations / Government Spending / Discount Rate a
Which of the following policies will reduce inflation most effectively? Open Market Operations / Government Spending / Discount Rate a
Subject:EconomicsPrice:2.88 Bought3
Which of the following policies will reduce inflation most effectively?
Open Market Operations / Government Spending / Discount Rate
a. Buy bonds / Decrease / Increase
b. Buy bonds / Increase / Decrease
c. Sell bonds / Decrease / Decrease
d. Sell bonds / Decrease / Increase
e. Sell bonds / Increase / Decrease
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Option D
To reduce inflation, the central bank of the country must ensure that money reduces in the economy. Now money supply can be reduced by selling bonds (open market operations), decreasing government spending, and increasing discount rate.
