The central bank controls the quantity of money in circulation through?
Answer Details
The central bank controls the quantity of money in circulation through open-market operations. Open-market operations refer to the buying and selling of government securities in the open market by the central bank. When the central bank buys government securities, it releases more money into the economy, leading to an increase in the quantity of money in circulation. On the other hand, when the central bank sells government securities, it reduces the money supply, leading to a decrease in the quantity of money in circulation. This tool helps the central bank to regulate the economy by influencing the interest rates, controlling inflation, and stabilizing the currency.