Answer:
Bank Rate: Bank rate is the rate which is fixed by the Central Bank. Credit is controlled by the central bank by making variations in the bank rate. This is the rate of interest which is charged from commercial bank for giving them loans. When the value of credit is to be increased, the bank rate reduces and vice-versa. Open market operations: In the open market operation, some activities going on such as buying and selling the government securities in open market. When the central bank is purchasing securities from the market it means it wants to increase the volume of credit. Banks starts selling securities for increasing their cash reserves i.e., their liquid assets increase. On the other hand, when central bank starts selling securities in the market it means it wants to control the volume credit, which are bought by the commercial banks. In the result their cash reserves are reduced and this effects their power of creating credit.
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