Question

The part of the money supply produced by the private banking system is called by the government or central bank is called?

Answer 1

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.