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GCE Economics 1990 Question 31

Question 31

Financial Institutions

One major function of the central bank is to

  1. A.mint money
  2. B.hold demand deposits and honour cheques
  3. C.act as a medium of exchange
  4. D.create money
  5. E.control and regulate money supply.
Show the answer and explanation

Answer: E (control and regulate money supply.)

Explanation

The central bank controls the money supply and credit through monetary policy.