A large increase in the FDI has increased the money supply in the economy and creates inflationary pressure How - Economics - Money and Banking

Question

A large increase in the FDI has increased the money supply in the
economy and creates inflationary pressure How can the central bank
sterilise the economy from such fluctuation ?

Komal Rani · Accepted Answer

Dear student 1 MONETARY POLICY monetary policy is a policy of
central bank tocontrol money supply and credit creation in economy
A quantitative measures increase in bank rate open market operaton
increase in legal reserve requirements B qualitative instruments
increase in marginal requirements moral suasion selective credit
controls 2 FISCAL POLICY refers to policy of central givt tp
control sitiuation of money supply in economy also known as revenue
and expenditure policy expenditure policy(decrase in govt spending)
revenue policy (increase in taxes) public borrowing (increase in
borrowing) deficit financing Regards

A large increase in the FDI has increased the money supply in the economy and creates inflationary pressure. How can the central bank sterilise the economy from such fluctuation ?