Multiple choice

Open market operations are used in India

  1. to control credit expansion

  2. to control inflation

  3. to help in government borrowings

  4. none of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In India, open market operations are primarily used to manage government borrowing requirements and control liquidity in the banking system. When RBI buys or sells government securities, it helps the government borrow from the market smoothly. While OMO can indirectly affect credit expansion and inflation, its primary purpose in the Indian context has been facilitating government borrowing and liquidity management.

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