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      Question

      Which monetary policy tool involves central bank buying

      and selling government securities to regulate the money supply?
      A Discount rate adjustments Correct Answer Incorrect Answer
      B Reserve requirements Correct Answer Incorrect Answer
      C Open market operations Correct Answer Incorrect Answer
      D Direct lending to banks Correct Answer Incorrect Answer
      E Foreign exchange interventions Correct Answer Incorrect Answer

      Solution

      Open market operations involve the central bank buying and selling government securities to control the money supply and influence interest rates.

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