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Consider the following statements regarding Operation Twist
  1. It was launched by the RBI to bring down interest rates.
  2. In the operation, the central bank uses the proceeds from sale of long-term government debt papers to buy short-term securities
Which of the above statements is/are correct?
  • a)
    1 only 
  • b)
    2 only 
  • c)
    Both 1 and 2 
  • d)
    Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements regarding Operation Twist It was lau...
Operation Twist
  1. RBI launched US-style ‘Operation Twist’ to bring down interest rates.
  2. ‘Operation Twist’ is when the central bank uses the proceeds from sale of short-term securities to buy long-term government debt papers, leading to easing of interest rates on the long-term papers.
  3. The objective behind such an operation is management of the yield curve.
  4. It will help to make loans less expensive with those looking to buy homes, cars and make savings less desirable as it doesn’t pay much interest.
  5. Other central banks, including the US Federal Reserve, have used similar measures.
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Consider the following statements regarding Operation Twist It was launched by the RBI to bring down interest rates. In the operation, the central bank uses the proceeds from sale of long-term government debt papers to buy short-term securitiesWhich of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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