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

borrowing by scheduled banks from the RBI

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lending by commercial banks to industry and trade

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purchase and sale of government securities by the RBI

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None of the above

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Solution

The correct option is C purchase and sale of government securities by the RBI
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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