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Question 3 (a) What are the functions of money? (b) There were three tools discussed in this session that are used by central banks to
Question 3 (a) What are the functions of money? (b) There were three tools discussed in this session that are used by central banks to affect the money supply. However, not all central bank uses all three. Find out what tools are used by the central bank in your region to affect the money supply Question 4 Draw diagrams illustrating the impact on the demand for money, the supply of money and the equilibrium interest rate, of each of the following. Explain what is going on in the money market in each case. (a) The central bank sells securities on the open market. (b) The economy grows (GDP increases) but the central bank moves to keep interest rates constant
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