A central bank wishes to adopt a contractionary monetary policy stance to curb rising domestic inflation. Which of the following combinations of measures represents a purely monetary policy action that would achieve this?
Purchasing government bonds on the open market and raising the main policy interest rate.
Increasing the main rate of corporation tax and reducing public sector infrastructure investment.
Selling government bonds on the open market and increasing the reserve requirement ratio.
Decreasing the interest rate paid on commercial bank reserves and lowering the minimum reserve ratio.
