Question

Arrange the following statements in the correct chronological order with respect to open market operations: \[ (A)\ \text{Payment for bonds increases total reserves in the economy} \] \[ (B)\ \text{RBI buys government bonds from the market} \] \[ (C)\ \text{RBI sells bonds when there is excess money supply} \] \[ (D)\ \text{Higher reserves increase money supply in the economy} \]

• A. (A), (B), (C), (D)
• B. (A), (C), (B), (D)
• C. (B), (A), (D), (C)
• D. (D), (A), (C), (B)

Hint:

In open market operations, buying bonds increases money supply, while selling bonds decreases money supply.

Answer 1

The Correct Option is C