[This is part of the series: The Complete Guide To Economics 101.]
What are the basic monetary policy tools?
The 3 tools of monetary policy are:
- Reserve Requirement
A central bank can increase, or decrease, the portion of deposits that banks are required to hold.
- Discount rate
A central bank can increase, or decrease, the rate at which it lends to other banks.
- Open Market Operations
A central bank can buy, or sell, government bonds in an effort to expand or contract the money supply.
And here is fiscal policy.