Question

Buying bonds by central bank how does it increase money supply?

Answer 1

Heya. . ..

It is the concept of quantitative measurement of money control...

Open market operation leads to buying the bonds by RBI from the common public...

In the case the money transfer to public from Bank becz payment will made to people in terms of cost of bonds...

So money supply increases...

-- Be Brainly...

Answer 2

It does this by increasing the supply of base money: it goes to the open market to buy a financial asset, such as government bonds. To pay for these assets, new central bank money is generated in the seller's loro account, increasing the total amount of base money in the economy