Monetary policy is the responsibility of the Central Bank and involves variations in the level of the supply of money, the interest rates and availability of credit aimed at affecting the level of expenditure, employment and economic activity within the economy.

Question

Monetary policy is the responsibility of the Central Bank and involves variations in the level of the supply of money, the interest rates and availability of credit aimed at affecting the level of expenditure, employment and economic activity within the economy.
a. Illustrate and discuss the impact on real GDP when reserve requirement is increase by the Central Bank.
b. List and explain other tools used by the Central Bank to influence the economy.