Answer to Question #80751 in Macroeconomics for Georgia Brown

Question

Explain in details the OMO process and its implications for the cash rate interest rate inflation and GDP draw buy hand effect of the OMO process using the MD MS diagram

Answer 1

Open market operations (OMO) refer to the buying and selling of government securities in the open market in order to expand or contract the amount of money in the banking system. Securities' purchases inject money into the banking system and stimulate growth, while sales of securities do the opposite and contract the economy.
https://www.investopedia.com/terms/o/openmarketoperations.asp#ixzz5R30hx5PM