Open market operations by a central bank mainly involve the purchase and sale of:
Correct answer: B. Government securities
- A. Foreign passports
- B. Government securities
- C. Corporate buildings
- D. Consumer goods
Explanation
Open market operations use purchases or sales of government securities to influence bank reserves and overall monetary conditions. The other options are not the normal instruments of this monetary policy tool.
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About Finance and Banking Basics
Business finance covers capital requirements, sources of funds, budgeting, cash flow, investment decisions and basic financial statements and ratios. Banking includes commercial bank functions, deposits, loans, credit creation, interest and the role of a central bank, including its monetary policy and regulatory functions.
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