Question

How will ‘Reverse Repo Rate’ and ‘Open Market Operations’ control excess money supply in an economy?​

Answer 1

Hey mate here is your answer
The usual aim of open market operations is—aside from supplying commercial banks with liquidity and sometimes taking surplus liquidity from commercial banks—to manipulate the short-term interest rateand the supply of base money in aneconomy, and thus indirectly controlthe total money supply, in effect expanding
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Answer 2

hey!!

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Reverse Repo rate is the rate at which Central Bank borrows money funds commercial banks.

• Increase in Reverse Repo Rate induces banks to transfer more funds to Central Bank and reduces banks ability to create credit.

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• Open Market Operations refers to buying and selling of government securities by Central Bank from to public and commercial banks. Sale of such securities reduces the reserve of commercial banks and adversely affects bank’s ability to create credit and hence decreases the money supply in the economy.

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☆°•hope help.u!!°•☆