Which of the following is not a way that most central banks can control the monetary base? a

Economics Nov 25, 2020

Which of the following is not a way that most central banks can control the monetary base?

a. Ensuring government deficits are small.

b. Controlling the key lending rate.

c. Setting reserve requirements.

d. Conducting open-market operations.

Expert Solution

Which of the following is not a way that most central banks can control the monetary base?

Answer:- a. Ensuring government deficits are small.

Because,For any given year, the federal budget deficit is the amount of money the federal government spends (also known as outlays) minus the amount of money it collects from taxes (also known as revenues). If the government collects more revenue than it spends in a given year, the result is a surplus rather than a deficit.

so, it is not a way that most central banks can control the monetary base.

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