Economics Monetary Policy Questions
The role of a central bank in monetary policy is to control and regulate the money supply and interest rates in an economy. It is responsible for implementing measures to stabilize prices, promote economic growth, and maintain financial stability. The central bank uses various tools such as open market operations, reserve requirements, and discount rates to influence the availability and cost of credit in the economy. Additionally, it monitors and supervises commercial banks, manages foreign exchange reserves, and acts as a lender of last resort to ensure the stability of the financial system.