By buying treasury bills, the Central Bank of Nigeria int...
By buying treasury bills, the Central Bank of Nigeria intends to
Increase money supply in the economy
Reduce the cash reserve ratio for banks
Reduce money supply in the economy
Increase the capital base of commercial banks
Correct answer is C
By buying treasury bills, the Central Bank of Nigeria intends to reduce the excess money in circulation in the economy. When the CBN issue treasury bills, they are inviting the public to invest in debt security. This means people will buy the security for a maturity period of 0-3 months.
By doing this, the excess money held by households is reduced. It is used to reduce money in supply and to control inflation.
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