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  1. Home
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Miscellaneous·2013·Medium

In the context of Indian economy, 'Open Market Operations' refers to

In the context of Indian economy, 'Open Market Operations' refers to

Options

  1. a.

    borrowing by scheduled banks from the RBI

  2. b.

    lending by commercial banks to industry and trade

  3. c.

    purchase and sale of government securities by the RBI

    Correct answer
  4. d.

    None of the above

Explanation

Open market operations (OMO) refer to 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. Securities' purchases inject money into the banking system and stimulate growth, while sales of securities do the opposite and contract the economy.

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