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"Open market operation" is a part of-
- a)Income policy
- b)Fiscal policy
- c)Credit policy
- d)Labour policy
Correct answer is option 'C'. Can you explain this answer?
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"Open market operation" is a part of-a) ...
Open Market Operations refer to the purchase and sale of the Government securities (G-Secs) by RBI from / to market. The objective of Open Market Operations is to adjust the rupee liquidity conditions in the economy on a durable basis.
When RBI sells government security in the markets, the banks purchase them. When the banks purchase Government securities, they have a reduced ability to lend to the industrial houses or other commercial sectors. This reduced surplus cash, contracts the rupee liquidity and consequently credit creation / credit supply. When RBI purchases the securities, the commercial banks find them with more surplus cash and this would create more credit in the system.
Thus, in the case of excess liquidity, RBI resorts to sale of G-secs to suck out rupee from system. Similarly, when there is a liquidity crunch in the economy, RBI buys securities from the market, thereby releasing liquidity.
Most Upvoted Answer
"Open market operation" is a part of-a) ...
Open Market Operations and Labour Policy
Open market operations refer to the buying and selling of government securities in the open market by the central bank. This is done to regulate the money supply in the economy. When the central bank buys government securities from commercial banks, it injects money into the economy, increasing the money supply. On the other hand, when it sells government securities, it withdraws money from the economy, decreasing the money supply.
Labour policy, on the other hand, refers to the set of laws and regulations that govern the relationship between employers and employees. It aims to promote employment, protect workers' rights, and ensure fair wages and working conditions.
Relation between Open Market Operations and Labour Policy
There is no direct relation between open market operations and labour policy. Open market operations fall under the purview of credit policy, one of the tools used by the central bank to regulate the money supply. Labour policy, on the other hand, is a part of the broader economic policy framework that aims to promote overall economic growth and development.
However, open market operations indirectly affect the labour market by influencing the level of economic activity in the economy. By regulating the money supply, the central bank can influence interest rates, exchange rates, and inflation, which in turn affect employment levels, wages, and working conditions.
For example, when the central bank lowers interest rates by injecting money into the economy through open market operations, it makes borrowing cheaper, which can stimulate investment and economic activity. This, in turn, can lead to increased demand for labour and higher wages. Conversely, when the central bank raises interest rates by withdrawing money from the economy through open market operations, it can lead to a slowdown in economic activity, which can result in job losses and lower wages.
Conclusion
In conclusion, open market operations are a part of credit policy, not labour policy. However, they indirectly affect the labour market by influencing the level of economic activity in the economy. It is important for policymakers to consider the interplay between monetary policy and labour policy when formulating economic policy to ensure overall economic growth and development.
Open market operations refer to the buying and selling of government securities in the open market by the central bank. This is done to regulate the money supply in the economy. When the central bank buys government securities from commercial banks, it injects money into the economy, increasing the money supply. On the other hand, when it sells government securities, it withdraws money from the economy, decreasing the money supply.
Labour policy, on the other hand, refers to the set of laws and regulations that govern the relationship between employers and employees. It aims to promote employment, protect workers' rights, and ensure fair wages and working conditions.
Relation between Open Market Operations and Labour Policy
There is no direct relation between open market operations and labour policy. Open market operations fall under the purview of credit policy, one of the tools used by the central bank to regulate the money supply. Labour policy, on the other hand, is a part of the broader economic policy framework that aims to promote overall economic growth and development.
However, open market operations indirectly affect the labour market by influencing the level of economic activity in the economy. By regulating the money supply, the central bank can influence interest rates, exchange rates, and inflation, which in turn affect employment levels, wages, and working conditions.
For example, when the central bank lowers interest rates by injecting money into the economy through open market operations, it makes borrowing cheaper, which can stimulate investment and economic activity. This, in turn, can lead to increased demand for labour and higher wages. Conversely, when the central bank raises interest rates by withdrawing money from the economy through open market operations, it can lead to a slowdown in economic activity, which can result in job losses and lower wages.
Conclusion
In conclusion, open market operations are a part of credit policy, not labour policy. However, they indirectly affect the labour market by influencing the level of economic activity in the economy. It is important for policymakers to consider the interplay between monetary policy and labour policy when formulating economic policy to ensure overall economic growth and development.
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"Open market operation" is a part of-a) Income policy b) Fiscal policy c) Credit policy d) Labour policy Correct answer is option 'C'. Can you explain this answer?
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