The instrument of monetary policy is tools/device which is used by the monetary authority in order to attain some predetermined objectives. There are two types of instruments –
Quantitative Instruments or General Tools: The Quantitative Instruments aka the General Tools of monetary policy (these tools are related to the quantity/volume of the money). They are designed to regulate or control the total volume of bank credit in the economy. These tools are indirect in nature and are employed for influencing the quantity of credit in the country. The quantitative measures of credit control are –
