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WAEC Commerce 2022 Question 26

Question 26

Banking

Central banks sell treasury bills to the public to

  1. A.increase cash in the banking system
  2. B.raise revenue for private investors
  3. C.raise revenue for commercial banks
  4. D.reduce cash in circulation
Show the answer and explanation

Answer: D (reduce cash in circulation)

Explanation

When the public buys treasury bills, money moves from them to the central bank, so less cash is left in circulation (open market operation).