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JAMB Commerce 2007 Question 44

Question 44

Banking

The central bank controls the quantity of money in circulation through

  1. A.open-market operations
  2. B.decreasing the tax rate
  3. C.issuing new currencies
  4. D.increasing the tax rate.
Show the answer and explanation

Answer: A (open-market operations)

Explanation

Through open-market operations the central bank buys or sells government securities to add or remove money.