Tools of monetary policy do not include

Analyze the question: The question asks which option is not a tool of monetary policy. So we need to know what monetary policy is and which instruments belong to it.

Explain the concept: Monetary policy is the control of the money supply and interest rates by the Central Bank (in Nigeria, the CBN) to achieve goals like price stability, economic growth and a healthy balance of payments.

Its main tools include:

• Open market operations (OMO): buying and selling government securities to reduce or increase money in circulation.
• Reserve requirements: the Cash Reserve Ratio (CRR), which is the percentage of deposits banks must keep with the CBN.
• Bank rate / Monetary Policy Rate (MPR): the rate at which the Central Bank lends to commercial banks.
• Others: liquidity ratio, special deposits, moral suasion, direct directives and selective credit controls.

Fiscal policy is different. It is handled by the government (Ministry of Finance) and uses taxation, public expenditure and public borrowing to influence the economy.

Step-by-step solution:

• A. Open market operations: monetary tool ✔
• B. Reserve requirement: monetary tool ✔
• C. Bank rate: monetary tool ✔
• D. Tax and public expenditure: fiscal policy tool ✘

Since the question asks for what is not a monetary policy tool, the answer is D.

Answer: D. Tax and public expenditure

Exam tip: Remember it this way: Monetary = Money supply and interest rates, handled by the Central Bank. Fiscal = Funds raised and spent by the Government (taxes and spending). Whenever you see "tax" or "public expenditure," think fiscal, not monetary. Also watch for the word "not" in the question, as it flips what you are looking for.