What are the main tools of monetary policy?
The main tools of monetary policy include open market operations, the discount rate, and reserve requirements.
Can you explain how open market operations work?
Open market operations involve the buying and selling of government securities to influence the money supply.
What impact do these tools have on inflation?
These tools can help control inflation by regulating the amount of money in circulation, affecting spending and investment.
Are there any risks associated with using these tools?
Yes, excessive use can lead to economic instability, such as hyperinflation or recession.
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