Q. Variable Reserve rates and Open market Operations are the instruments of __________ ?
Answer: Monetary Policy
Notes: Correct answer: Monetary Policy. Monetary policy involves managing the money supply and interest rates to influence economic activity. Variable reserve rates (like reserve requirements) and open market operations (buying/selling government securities) are key tools used by central banks, such as the Federal Reserve in the U.S., to control inflation and stabilize the currency. These actions directly affect liquidity and credit availability in the economy.
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