Consider the following statements. Assertion (A): A well-developed money market is the basis for an effective monetary policy. It is in the money market that the Central Bank comes into contact with the financial sectors of the economy as a whole and it is through the liquidity in the market that influences the cost and availability of credit. Reasoning (R): A well-organized money market is an essential condition for the successful operation of the Central Banking policies, and for holding the conditions of liquidity within the bounds of what the monetary authorities consider desirable.

The correct answer is C.

Assertion (A) is true because a well-developed money market provides the central bank with a tool to influence the cost and availability of credit. The central bank can buy and sell government securities in the money market to increase or decrease the supply of money. This can affect interest rates, which in turn affect the cost of borrowing money.

Reasoning (R) is also true because a well-organized money market is essential for the central bank to effectively implement its monetary policy. The central bank needs to be able to buy and sell government securities quickly and easily in order to influence the money supply. A well-organized money market provides the central bank with this ability.

Therefore, both (A) and (R) are true and (R) offers correct explanation to (A).