BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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offer commercial banks more credit in open market
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sell securities in the open market
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openly announce to the market that it intends to expand credit.
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buy securities from non-government holders
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Detailed explanation-1: -Such a policy means an increased flow of money in the economy-by purchasing the securities greater money flow is guaranteed. Was this answer helpful?
Detailed explanation-2: -What is open market operations by RBI? Open Market Operations is the simultaneous sale and purchase of government securities and treasury bills by RBI. The objective of OMO is to regulate the money supply in the economy. RBI carries out the OMO through commercial banks and does not directly deal with the public.
Detailed explanation-3: -Open market operations refer to the selling and purchasing of the treasury bills and government securities by the central bank of any country in order to regulate money supply in the economy. It is one of the most important ways of monetary control that is exercised by the central banks.
Detailed explanation-4: -Benefits of Open Market Operations Open market operations allow the Federal Reserve (or the central banks in other countries) to prevent price inflation or deflation without directly interfering in the market economy.