Which of the following is not a tool of monetary policy?

Monetary policy refers to the actions undertaken by a nation's central bank to manage the money supply and interest rates with the aim of promoting economic stability and growth. The tools traditionally associated with monetary policy include the discount rate, open market operations, and reserve requirements.

The discount rate is the interest rate charged by central banks to commercial banks for short-term loans, influencing how much banks can borrow and, consequently, how much they can lend to consumers and businesses. Open market operations refer to the buying and selling of government securities in the open market to influence the liquidity in the banking system. Reserve requirements dictate the minimum amount of reserves that banks must hold against deposits, directly affecting their capacity to create loans.

Taxation, on the other hand, is a fiscal policy tool and relates to government revenue generation through taxes. While taxation can impact overall economic activity and indirectly influence monetary conditions, it is not a direct tool of monetary policy. Therefore, identifying taxation as not being a tool of monetary policy aligns with the understanding that monetary policy focuses specifically on managing the money supply and credit.