An economy is experiencing a rate of inflation significantly above its target. Which of the following options represents a contractionary monetary policy response that can be implemented directly by the central bank?
Raising the policy interest rate and selling financial assets under quantitative tightening
Increasing the standard rate of income tax and reducing public expenditure on infrastructure
Lowering the discount rate and purchasing government bonds from the secondary market
Imposing legal ceilings on commercial bank lending rates and raising the national minimum wage
