Read the following case study paragraph carefully and answer the questions based on the same.

The central bank of India (Reserve Bank of India) is the apex institution that controls the entire financial market. It's one of the major function is to maintain the reserve of foreign exchange. Also, it intervenes in the foreign exchange market to stabilise the excessive fluctuations in the foreign exchange rate. In other words, it is the central bank's job to control a country economy through monetary policy.

If the economy is moving slowly or going backward, there are steps that central bank can take to boost the economy. These steps, whether they are asset purchases or printing more money, all involve injecting more cash into the economy. The simple supply and demand economic projection occur and currency will devalue. When the opposite occurs, and the economy is growing, the central bank will use various methods to keep that growth steady and in-line with other economic factors such as wages and prices. Whatever the central bank does or in fact don't do, will affect the currency of that country. Sometimes, it is within the central bank's interest to purposefully affect the value of a currency. For example, if the economy is heavily reliant on exports and their currency value becomes too high, importers of that country's commodities will seek cheaper supply; hence directly affecting the economy.

Name the tool / policy which is used by Central Bank to control the flow of money in domestic economy.

Monetary Policy

The tool/policy used by the Central Bank to control the flow of money in the domestic economy is Monetary Policy.

Monetary policy refers to the actions taken by a central bank to control the money supply and interest rates. The central bank can use a variety of tools to implement monetary policy, such as:

• Open market operations: Buying or selling government bonds in the open market. When the central bank buys bonds, it injects money into the economy. When the central bank sells bonds, it removes money from the economy.
• Reserve requirements: The percentage of deposits that banks are required to hold as reserves. The central bank can raise or lower reserve requirements to control the amount of money that banks can lend.