________ are the most important monetary policy tool because they are the primary determinant of changes in the ________,the main source of fluctuations in the money supply.
A)Open market operations;monetary base
B)Open market operations;money multiplier
C)Changes in reserve requirements;monetary base
D)Changes in reserve requirements;money multiplier

Question

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government securities by the central bank to control the money supply. These operations directly impact the monetary base, which is the main source of fluctuations in the money supply. Therefore, open market operations are the most important monetary policy tool. The money multiplier is a result of the money supply and does not directly determine changes in the money supply. Changes in reserve requirements can also impact the money supply, but they are not as significant as open market operations.

________ Are the Most Important Monetary Policy Tool Because They