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Which of the following is a tool of monetary policy that a nation’s Central Bank could use to stabilize the economy during an inflationary period?
  • a)
    Selling Government Securities 
  • b)
    Lowering banks reserve requirements
  • c)
    Lowering bank discount rate 
  • d)
    None of the above.
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
Which of the following is a tool of monetary policy that a nation&rsqu...
Central banks use contractionary monetary policy to reduce inflation. They reduce the money supply by restricting the amo of money banks can lend. The banks charge a higher interest rate, making loans more expensive. Fewer businesses and individuals borrow, slowing growth.
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Most Upvoted Answer
Which of the following is a tool of monetary policy that a nation&rsqu...
's central bank can use to influence the economy?

A: Open market operations
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Features of a Mixed Economy:A mixed economy is an economic system that combines elements of both a market economy and a planned economy. It incorporates features of both private enterprise and government intervention. The correct answer is D, as all of the following features are characteristic of a mixed economy:1. Planned economy:A mixed economy includes elements of a planned economy, where the government plays a role in guiding and regulating economic activities. It formulates economic plans and policies to ensure the efficient allocation of resources and to promote economic stability.2. Dual system of pricing:In a mixed economy, there exists a dual system of pricing, which means that both market prices and government-set prices coexist. While market forces determine prices for most goods and services, the government may intervene to regulate prices in certain sectors to protect consumers or promote social welfare.3. Balanced regional development:Another characteristic of a mixed economy is the emphasis on balanced regional development. The government intervenes to ensure that economic growth and development are not concentrated in specific regions or industries but are spread across different regions and sectors. This helps to reduce regional disparities and promote overall economic stability and social welfare.Benefits of a Mixed Economy:A mixed economy offers several benefits due to its combination of market forces and government intervention. Some of these benefits include:1. Economic efficiency:By incorporating market mechanisms, a mixed economy allows for resource allocation based on supply and demand, which promotes economic efficiency. Market forces encourage competition, innovation, and productivity, leading to higher levels of economic growth.2. Social welfare:Government intervention in a mixed economy enables the provision of public goods and services that may not be adequately provided by the market alone. This includes areas such as healthcare, education, infrastructure, and social security, ensuring a certain level of social welfare and equity.3. Stability and regulation:The government's role in a mixed economy helps to maintain economic stability through macroeconomic policies such as fiscal and monetary measures. It also regulates certain sectors to prevent market failures, protect consumer rights, and ensure fair competition.Conclusion:A mixed economy combines the advantages of both market forces and government intervention. It allows for economic efficiency, social welfare, and stability. The features of a mixed economy include elements of a planned economy, a dual system of pricing, and balanced regional development. These features work together to create a system that promotes both economic growth and social welfare.

Which of the following is a tool of monetary policy that a nation’s Central Bank could use to stabilize the economy during an inflationary period?a)Selling Government Securitiesb)Lowering banks reserve requirementsc)Lowering bank discount rated)None of the above.Correct answer is option 'A'. Can you explain this answer?
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