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JAMB Economics 1981 Question 13

Question 13

Financial Institutions

By open market operations we mean the process by which

  1. A.the Central Bank intervenes in the open market to buy or sell securities
  2. B.the commercial banks intervene in the open market to buy or sell treasury bills
  3. C.market women buy and sell commodities in the open market
  4. D.the money market takes over the functions of the Central Bank
  5. E.the bank rate is determined in the open market.
Show the answer and explanation

Answer: A (the Central Bank intervenes in the open market to buy or sell securities)

Explanation

Open market operations are the Central Bank's buying and selling of government securities to change the money supply.