When the Central Bank buys government securities, it is implementing ___ policySelect one:a. Interest Ratesb. Government Expendituresc. Fiscald. Monetary

Break Down the Problem

1. Identify the action being taken by the Central Bank, which is buying government securities.
2. Determine which type of policy this action corresponds to among the given options: Interest Rates, Government Expenditures, Fiscal, or Monetary.

Relevant Concepts

1. Monetary Policy: This refers to actions taken by the central bank to manage the money supply and interest rates in the economy.
2. Fiscal Policy: This relates to government spending and taxation decisions.
3. Interest Rates: These are influenced by monetary policy but do not directly represent a type of policy themselves.
4. Government Expenditures: This covers how much the government spends, a component of fiscal policy.

Analysis and Detail

1. When a central bank purchases government securities, it injects liquidity into the economy, increasing the money supply.
2. This action typically aims to lower interest rates, stimulate spending, and boost economic activity, all of which fall under the broader umbrella of monetary policy.

Verify and Summarize

Given the understanding of monetary policy, it is evident that the action of the Central Bank buying government securities is a classic example of implementing monetary policy.

Final Answer

d. Monetary