Monetary Economics

Read the following passage carefully and answer the questions given below:
Money is the commonly accepted medium of exchange. The first and foremost role of money is that it acts as a medium of exchange. Economic exchanges without the mediation of money are referred to as barter exchanges. The central bank has several important functions. It issues the currency of the country. India got its central bank in 1935. Its name is the ’Reserve Bank of India.’ It controls money supply of the country through various methods, like bank rate, open market operations, and variations in reserve ratios. It acts as a banker to the government. It is the custodian of the foreign exchange reserves of the economy. It also acts as a bank to the banking system. Currency issued by the Central Bank can be held by the public or by the commercial banks and is called the ’high-powered money’ or ’reserve money’ or ’monetary base’ as it acts as a basis for credit creation.

Which of the following statements about monetary policy tools is correct?