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Describe open market operations

Describe open market operations? What is its consequence on availability of credit?

Answer: Open market operations signify the purchase and sale of government securities by the central bank from/to the public and commercial banks. The sale of government securities decreases the reserves of commercial bank and in turn decreases credit. The Purchase of securities rises the reserves and increases their ability to provide credit.

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  • Q : Describe open market operations

    Describe open market operations? What is its consequence on availability of credit? Answer: Open market operations signify the purchase and sale of government secur

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