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Explain the meaning of open market …

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Explain the meaning of open market operation how is it used to reduce money supply in the economy

Posted by Nishu Nishu 5 years, 11 months ago

CBSE > Class 12 > Economics

1 answers

Syed Khabib 5 years, 11 months ago

Open market operation refers to the sale and purchase of securities in the open market by the Central Bank.By selling securities like NSCs ,the central bank get cash from the economy. By buying securities, the central bank releases cash .To reduce money supply in the economy central bank sale its securities .By selling the securities, the central bank withdraws cash balance from the economy and due to this supply of money will reduce in the economy.

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