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Question 54Asked in DSSSB TGT Computer Science (Technical), 7 Aug 2021, Shift 3

Selling of a bond by RBI to private individuals or institutions leads to ________.

Selling of a bond by RBI to private individuals or institutions leads to ________. I. Reduction in quantity of reserves II. Reduction in money supply
  1. AOnly I
  2. BOnly II
  3. CBoth I and II
  4. DNeither I nor II
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Correct answer: (C) Both I and II

Explanation

When RBI sells bonds (open market operation), buyers pay with money that leaves the banking system. This reduces bank reserves and so the money supply.

From DSSSB TGT Computer Science PYQ (Technical), 7 Aug 2021, Shift 3

This is question 54 of DSSSB TGT Computer Science PYQ (Technical), 7 Aug 2021, Shift 3. See all questions of this paper with answers, or attempt the paper as a timed online test to get your score and all-India rank.