State whether the given statement is …
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Gaurav Seth 5 years, 3 months ago
True
The sale or purchase of government securities by the Central Bank in open market is termed as open market operations. Open Market Operations refer to the buying and selling of securities either to the public or to the commercial banks in an open market.
To reduce credit, the government securities are sold by the Central Bank. It reduces the supply of money in the hands of commercial banks and common public. On the other hand, to increase the credit, the Central Bank purchases the securities from public which releases money in the market. In this way, the Central Bank uses open market operations as a method of credit control.
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