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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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