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2 point 9. Which of the following is a tool used by the Fed in the conduct of monetary policy? O A. changes in the prime rate
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9) option D is correct. Monetary policy tools include open market sale and purchase of government securities, changing the reserve requirement and changing the discount rate. The aim of monetary policy is to maintain price stability and high employment and the most common monetary policy tool used is open market purchase of government securities

10) option A is correct. because it is purchasing Government bonds it is creating a demand for it. This will increase the price of pound and decrease the rate of interest. Supply of bond is not affected at this point.

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