Question

Open market operations, one of the measures taken by RBI in order to control credit expansion in the economy means ?

• A. Sale or purchase of Govt. securities
• B. Issuance of different types of bonds
• C. Auction of gold
• D. None of the above

Hint:

OMO = Liquidity control mechanism by RBI. Sell securities → absorb money; Buy securities → release money.

Answer 1

The Correct Option is A

Step 1: Open Market Operations (OMO) are a monetary policy tool of the Reserve Bank of India.
Step 2: OMOs involve the sale or purchase of government securities in the open market by the RBI to regulate liquidity in the economy.
Step 3: Sale of securities = reduces liquidity; Purchase of securities = injects liquidity. \[ \boxed{\text{Sale or purchase of Govt. securities}} \]