Answer to Question #116203 in Macroeconomics for Michael

Question

The central bank use monetary policy to control undesirable fluctuations in real GDP among other methods by

Answer 1

The gross domestic product refers to the monetary value of goods and services that are produced within a country.

Monetary policies are policies that are used by the central bank to regulate the money supply in an economy.

The central bank increases money supply with an aim of controlling undesirable fluctuations in the real GDP. Some of the policies that the central bank use to increase the money supply are:

#Through buying the treasury bills from the public(Open market operations}

#Reducing the discount rate.

#Reducing the required reserve ration.