Categories: Economics JAMB

Which of the following is used by the central bank to control the rate of interest

A. bill of exchange
B. banker’s order
C. fixed deposit account
D. open market operation

Correct Answer:

Option D – open market operation

Explanation

The open market operation refers to when the central bank buys or sells government securities to the public. This is done to control the flow of money in the country as well as control the rates of interest.

When there is too much money in circulation in the economy, the government sells securities, and increase the interest rates on those securities, to encourage savings and investments while discouraging borrowing. When it wants to increase the money in circulation, it buys buys from financial institutions, reduces interest rates to ecourage borrowing, thereby releasing more money into the economy.

Sunday

Share
Published by
Sunday

Recent Posts

List of Universities Offering Veterinary Medicine in Nigeria

Veterinary medicine is the branch of medicine that deals with the prevention, diagnosis, and treatment…

4 months ago

List of Universities Offering Anthropology in Nigeria

Anthropology is the scientific study of human beings and their cultures. It encompasses a wide…

4 months ago

List of Universities Offering Sociology in Nigeria

Sociology is the scientific study of human society, culture, and behavior. It examines the social…

4 months ago

List of Universities Offering Social Work in Nigeria

Social Work is a profession dedicated to helping individuals, families, and communities to cope with…

4 months ago

List of Universities Offering Religious Studies in Nigeria

Religious studies is an academic discipline that explores the beliefs, practices, and history of various…

4 months ago

List of Universities Offering Public Administration in Nigeria

Public administration is the field of study and practice that focuses on the organization and…

4 months ago