ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Open market operations are one of three tools used by the Fed to affect the availability of money and credit. The term refers to a central bank buying or selling securities in the open market to influence the money supply.

Detailed explanation-2: -OMOs is a tool in monetary policy that allows a central bank to control the money supply in an economy. Depending on the condition of the economy, central banks will seek to implement either contractionary or expansionary monetary policy.

Detailed explanation-3: -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-4: -Key Takeaways. Quantitative easing is a form of monetary policy used by central banks to increase the domestic money supply and spur economic activity. In QE, the central bank purchases government bonds and other financial instruments, such as mortgage-backed securities (MBS).