ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -2.1 Open Market Operations (OMO) means the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Purchases inject money into the banking system and stimulate growth while sales of securities do the opposite.

Detailed explanation-2: -Open market operations (OMOs)–the purchase and sale of securities in the open market by a central bank–are a key tool used by the Federal Reserve in the implementation of monetary policy. The short-term objective for open market operations is specified by the Federal Open Market Committee (FOMC).

Detailed explanation-3: -Buying and selling of government securities by the central bank from or to the public and banks are known as open market operations.

Detailed explanation-4: -open-market operation, any of the purchases and sales of government securities and sometimes commercial paper by the central banking authority for the purpose of regulating the money supply and credit conditions on a continuous basis.