Q26 of 30 Page 1

Explain how open market operations are helpful in controlling credit creation.

Open market operations refer to the sale and purchase of government securities and bonds by the Central Bank. While to control inflation, the Central Bank sells government securities to the public through the banks resulting in the transfer of a part of bank deposits to the Central Bank account and reduces credit creation capacity of commercial banks.


More from this chapter

All 30 →
24

Government insure expenditure to popularize yoga among the masses. Analyses its impact on gross domestic product and welfare of the people.

 25

Explain the ‘store of value’ function of money. How has solved the related problem created by barter?

OR


Explain the ‘unit of accounts’ function of money. How has it solved the related problem created by barter?


 27

What is government budget? Explain how taxes and subsides can be used to influence allocation of resources.

OR


Define revenue receipts in government budget. Explain how government budget can used to bring in price stability in the economy.


 28

Given consumption curve, derive saving curve and state the steps taken in the process of derivation. Use diagram.