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    Question

    Open-market operations of Reserve Bank of India refer

    to?
    A Trading in securities Correct Answer Incorrect Answer
    B Auctioning Correct Answer Incorrect Answer
    C Transaction in gold Correct Answer Incorrect Answer
    D All of these Correct Answer Incorrect Answer
    E Special Bonds Correct Answer Incorrect Answer

    Solution

    RBI's Open Market Operations (OMOs) refer to the purchase and sale of government securities (G-secs) in the open market to manage liquidity, control money supply, and influence interest rates, thereby controlling inflation and stimulating growth. When RBI buys securities, it injects money (increases liquidity); when it sells, it withdraws money (reduces liquidity), impacting banks' lending capacity and overall economic activity.┬а

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