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Question

Open Market Operation (OMO) refers to the purchase and sale of __________.

A
gold
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B
foreign exchange
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C
iron and steel
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D
government securities
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Solution

The correct option is D government securities
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.
This is one of the tools used bu the Reserve Bank of India to increase or decrease the money supply in the economy.

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