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Which of the following is one of the Open Market Operations by the Reserve Bank of India?
Question

Which of the following is one of the Open Market Operations by the Reserve Bank of India?

A.

Buying and selling of bonds issued by the Government in the open market

B.

Buying and selling of bonds issued by commercial banks in the open market

C.

Only buying of bonds issued by the Government in the open market

D.

Only selling of bonds issued by the Government in the open market

Correct option is A

One of the Open Market Operations (OMOs) conducted by the Reserve Bank of India (RBI) is the buying and selling of bonds issued by the Government in the open market.
Selling of government security by RBI (to private individuals or institutions) leads to a reduction in the quantity of reserves and hence the money supply.
There are two types of open market operations: outright and repo.

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