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Question
Open market operations (OMOs) are related to _________.
Open market operations (OMOs) are related to _________.
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Solution
The correct option is A Monetary policy
Open market operation
(OMO) is related to the monetary policy by the central bank in which the bank deals in the
sale and purchase of securities and bonds in the open market to control the supply of
money in the economy. By selling the securities and bonds, the central bank soaks
liquidity from the economy which controls the inflation in the economy by
decreasing the purchasing power of the people and by buying the securities and bonds, the
central bank releases liquidity which controls deflation in the economy by
increasing the purchasing power of the people.
Open market operation (OMO) is related to the monetary policy by the central bank in which the bank deals in the sale and purchase of securities and bonds in the open market to control the supply of money in the economy. By selling the securities and bonds, the central bank soaks liquidity from the economy which controls the inflation in the economy by decreasing the purchasing power of the people and by buying the securities and bonds, the central bank releases liquidity which controls deflation in the economy by increasing the purchasing power of the people.
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