Question : ____________refers to the sale and purchase of government securities by RBI in the open market to influence liquidity in the economy in the medium term.
Option 1: Marginal Standing Facility
Option 2: Credit Ceiling
Option 3: Open Market Operations
Option 4: Liquidity Adjustment Facility
Correct Answer: Open Market Operations
Solution : The correct answer is Open Market Operations .
The central bank uses open market operations (OMOs) as a tool of monetary policy to manage the amount of money in the economy by buying and selling assets on the open market. The central bank extracts liquidity from the economy by selling the securities and releases it by purchasing the securities.
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