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The Central Bank Monetary policy instrument by which it buys and sells securities is called

Commerce
JAMB 2023

The Central Bank Monetary policy instrument by which it buys and sells securities is called

  • A. open market operation
  • B. bank credit
  • C. cash reserve ratio
  • D. bank rate
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Correct Answer: Option A
Explanation

Open market operations ("OMOs") are the central bank's primary tool of monetary policy. If the central bank wants interest rates to be lower, it buys bonds. Buying bonds injects money into the money market, increasing the money supply.


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NECO June/July 2024 - Get offline past questions & answers - Download objective & theory, all in one app 48789
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Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts
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NECO June/July 2024 - Get offline past questions & answers - Download objective & theory, all in one app 48789
Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts