____________ refers to buying and selling of bonds issued by the Government.
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. Open Market Operations.
Open Market Operations (OMO) refers to the buying and selling of government bonds by the central bank (Reserve Bank of India in India's context). This monetary policy tool is used to regulate liquidity and control inflation or deflation in the economy. When the central bank buys bonds, it injects money into the banking system, increasing liquidity. Conversely, selling bonds withdraws money from circulation, reducing liquidity. OMOs help maintain monetary stability and ensure smooth functioning of the financial markets.