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Question
The process of buying and selling of securities by the central bank of a country is known as ______.
Options
Margin Requirement
Open Market Operations
Cash Reserve Ratio
Statutory Liquidity Ratio
Solution
The process of buying and selling of securities by the central bank of a country is known as Open Market Operations.
Explanation:
Open Market Operations (OMO) is when the central bank buys and sells government assets in the open market to control the economy's money supply. When the central bank buys assets, it adds money to the banking system, improving liquidity. When it sells securities, it removes funds from the system, lowering liquidity.
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