Purchase of securities in the open market by the commercial banks reduces their credit crediting power
True of false with Reasons:
Purchase of securities in the open market by the commercial banks reduces their credit crediting power.
Anurag Pathak Changed status to publish December 24, 2023
True,
The purchase of securities decreases the reserves of commercial banks, which reduces their credit-creating power.
Explanation:-
When commercial banks purchase securities from the public, The public withdraws their money from the deposits. It decreases the cash reserves with the commercial which reduces their lending capacity.
Anurag Pathak Changed status to publish December 24, 2023
