During depression, it is advisable to ___________.

lower bank rate and purchase securities in the open market

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increase bank rate and purchase securities in the open market

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decrease bank rate and sell securities in the open market

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increase bank rate and sell securities in the open market

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Solution

The correct option is A lower bank rate and purchase securities in the open market
During depression, it is advisable to lower bank rate and purchase securities in the market because it will encourage borrowings and investment.

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By purchasing government securities in the open market, the central bank intends to release greater money supply in the market.

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