The process of Buying and selling of bonds issued by the Government by the central bank is called.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Open Market Operations.
Open Market Operations (OMO) refer to the buying and selling of government securities (bonds) by the Central Bank (in India, the RBI) in the open market.
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When the Central Bank buys government bonds → it injects money into the economy (increases money supply).
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When it sells government bonds → it withdraws money from the economy (reduces money supply).
Thus, OMO is a key monetary policy tool used to control liquidity and interest rates in the economy.