alleryOpen Market Operations (OMO) by the RBI refers to
AThe RBI issuing new currency notes
BBuying and selling of government bonds in the open market
CChanging the GDP growth rate
DIssuing bank licences
Answer & Solution
Correct answer: B. Buying and selling of government bonds in the open market
OMO = buying/selling of government securities.
BUYING bonds injects reserves into the banking system (expands money supply)
SELLING absorbs reserves (contracts money supply).
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