--%>

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.

   Related Questions in Macroeconomics

  • Q : What is Bank rate Bank rate : This is

    Bank rate: This is the rate at which the central bank loans money to commercial bank.

  • Q : Steps to analyze modifications in

    What are the Steps to analyze modifications in equilibrium?

  • Q : Potential GDP The hypothetical

    The hypothetical information in the following table shows what the economic situation will be in 2015 if the Fed does not use monetary policy: Year Potential GDP Real GDP Price Level 2014 $15.2 trillion $15.2 trillion 110.0 2015 $15.6 trillion $15.8 trillion

  • Q : Conditions through which the supply

    What are the conditions through which the supply curve will shift?

  • Q : Assignment Task 1 – Commercial banks in

    Task 1 – Commercial banks in United Economy have total deposits of AED 300 billion. Their reserves are AED 15 billion, two- thirds of which are with the Central Bank as deposits. There are AED 30 billion notes outside the banks. There are no coins! Calculate- a) The monetary base. b) The bank

  • Q : Components of aggregate demand What are

    What are the components of aggregate demand (AD)? Answer: The components of AD are as follows:AD = C + I + G + (X - M) By Simplifying AD = C + I, Here C refers to Household consumption demand and I refer

  • Q : Problem onto marginal tax rates A

    A prosperous person who made higher and higher incomes yearly would possibly benefit most from: (w) proportional tax system. (x) progressive tax system, much like the one in place today. (y) regressive tax system. (z) fixed percentage tax system.

    Q : Relevance of matter-SWOT analysis

    Relevance of matter: Relevance of matter is very much important while choosing any goals. Are the goals relevant to the vision of the company? A goal of having maximum number of customers seems fantabulous, however at the same time bank needs to make

  • Q : Weighed marginal cost and marginal

    Cite examples of recent decisions that you made in which you, at least implicitly, weighed marginal cost and marginal benefit?

  • Q : Help If the price of K declines, the

    If the price of K declines, the demand curve for the complementary project J will: