Economics · Monetary Policy
How does a Central Bank carry out debt monetization?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The central bank reduces the money supply in the economy
- 2The government borrows money from foreign institutions
- 3The central bank increases interest rates to control inflation
- 4The central bank directly finances government deficit by purchasing government debt✓
Correct answer
The central bank directly finances government deficit by purchasing government debt
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