The technique of controlling money supply through the purchase and sale of government bond is called?
Answer Details
The technique of controlling money supply through the purchase and sale of government bond is called open market operations. In this technique, the central bank of a country buys or sells government bonds from or to commercial banks, thereby influencing the amount of money available in the economy. If the central bank buys government bonds, it releases more money into the economy, thus increasing the money supply. On the other hand, if the central bank sells government bonds, it reduces the amount of money available in the economy, thus decreasing the money supply. This technique is used by central banks to achieve their monetary policy objectives, such as controlling inflation or stimulating economic growth.