GK
INDIAN ECONOMY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If the RBI adopts an expansionist open market operations policy, this means that it will
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buy securities from non-government holders
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sell securities in the open market
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offer commercial banks more credit in the open market
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openly announce to the market that it intends to expand credit
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Explanation:
Detailed explanation-1: -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-2: -The Reserve Bank employs two types of reserve ratio for this purpose, viz. the Statutory Liquidity Ratio (SLR) and the Cash Reserve Ratio (CRR). The statutory liquidity ratio refers to that proportion of aggregate deposits which the commercial banks are required to keep with themselves in a liquid form.
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