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Ratios and OMO

How does the ...

Question

How does the "purchase of government securities in the open market" affect the money supply?

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Solution

This is an open market operation. Purchase of government securities will lead to a rise in money supply.

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Similar questions

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

Q. Purchase or sale of government securities by the Central bank from the general public in the bond market, in a bid to increase or decrease the money supply in the economy is referred to as ________.

Q. When the RBI makes open market operations by sale of securities the money supply in the banking system?

Q. Under open market operations, the RBI sells the government securities to reduce the amount of money in the economy.

Q. Whether the following changes by the Reserve Bank will increase the money supply or decrease the money supply?
(i) Rise in Repo rate.
(ii) Purchase of Securities in the open market.
(iii) RBI increases the margin from

20

30

.
(iv) RBI reduces the Cash reserve ratio.

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