There are two entities making their own policies that affect the entire economy. One is the government that makes fiscal policy and the other is the central bank creating the monetary policy. Monetary policy directly affects the money supply in the economy. This is done via various instruments like repo rate, reverse repo rate, open market operations, and bank rate. These are the quantitative methods of money supply control. There are certain qualitative ones too. These are moral suasion, margin requirements, and credit rationing. The central bank of India is RBI. It issues currency notes in India. In fiscal policy, the government decides the taxation rate, how much to spend, and other things that affect aggregate demand.

Which of the following is not a type of open market operations?

Bank rate

The correct answer is Option 3: Bank rate

The term "open market operations" (OMO) refers to the buying and selling of government securities by a central bank to regulate the money supply and influence interest rates. The common types of open market operations are:

1. Outright Transactions: These involve the purchase or sale of government securities with the intention of holding them until maturity.

2. Repo Transactions: These are short-term agreements where the central bank buys securities with the agreement to sell them back at a later date, typically used to inject or withdraw liquidity from the banking system.

3. Reverse Repo Transactions: This is the opposite of a repo, where the central bank sells securities with the agreement to repurchase them later.

The Bank Rate is not a type of open market operation. Instead, it is the rate at which the central bank lends to commercial banks and influences overall monetary policy.