An open market operation is instrument of which of following? •
| An open market operation is instrument of which of following?
A. Fiscal policy
B. Budget policy
C. Monetary Policy
D. LPG
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Right Answer is: C
SOLUTION
• An open market operation which involves buying or selling of government securities from or to the public and banks.
• It is an instrument of monetary policy.
• This mechanism influences the reserve position of the banks, yield on government securities and cost of bank credit.