45.2k views
2 votes
The part of the money supply produced by the private banking system is called by the government or central bank is called?

User Davuz
by
9.3k points

1 Answer

3 votes

Open Market Operation is the system in which the Central Bank supply money to the private banks.

Step-by-step explanation:

The Reserve bank buy as well as sale the government securities so that it can control money supply. By selling and buying securities in a free market the amount of money is either expanded or contracted.

During inflation the price of the product rises , at that time the Reserve Bank purchase the securities so that money is not spend but in the other hand during deflation there is fall in the price as a result the Reserve Bank sale the securities so that purchase can be done.

User Bryan Kyle
by
8.9k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories