Question

explain the role of 'Open Market Operations' in reducing this gap?​

Answer 1

hey!!

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•°☆Answer:-°•☆

Deflationary Gap is the amount by which the aggregate demand falls short of aggregate supply at the full employment level. It is called deflationary because it leads to a fall in price level.

• Open Market Operations refer to buying and selling of government securities by the central bank in the open market. Central bank can reduce deflationary gap by buying securities. Those who sell receive payments by cheques from the central bank. The money flows out from Central bank into the commercial banks. This raises lending capacity of commercial banks. Banks lend more. Spending rises which reduces deflationary gap..

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Answer 2

Answer:

Explanation:

Open market Operations refer to buying and promoting of government securities through the valuable bank inside the open market. crucial bank can lessen deflationary gap by means of buying securities. folks who sell acquire payments by way of cheques from the significant bank. The money flows out from crucial financial institution into the industrial banks.

Open market operations confer with the selling and buying of the treasury payments and authorities securities by the relevant financial institution of any united states of America so that it will modify money deliver in the financial system. it is one of the maximum vital ways of monetary manipulate this is exercised through the critical banks.

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