QUESTION

Easy

Economy

Prelims 2013

In the context of Indian economy, Open Market Operations’ refers to:

Select an option to attempt

Explanation

In India, Open Market Operations involve the Reserve Bank of India buying or selling government securities to regulate liquidity and interest rates.

When the RBI buys securities, it injects money into the market, lowering interest rates and stimulating the economy.

Conversely, selling securities absorbs money from the market, raising interest rates, and managing inflation. OMOs are a vital tool for the RBI to achieve monetary policy goals and foster economic growth.

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