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Discussion Question

Suppose there is hyperinflation prevailing in a country. To solve this problem, the central bank of the country is planning either to change the bank’s minimum reserve requirement or resolve this issue through Open Market Operation (OMO). Which one of these two alternatives is best to solve the problem in the long run? Give logical reasons to support your answer.

MGT411 GDB Idea guidline
In My opinion.
Open market operation is best to prevent inflation for long term becuase it indirectly control the total money supply , short term interest rate and supply of base money.In OMO a central bank buys or sells government bonds on the Open Market. The OMO is a means through which inflation can be controlled because when treasury bills are sold to commercial banks these banks can no longer give out loans to the public for the long period and therefore money is being reduced from circulation