Question : The ________ and _______ determine the corridor for the daily movement in the weighted average call money rate.
Option 1: Reverse repo rate, discount rate
Option 2: Marginal Standing Facility, reverse repo rate
Option 3: Liquidity adjustment facility, repo rate
Option 4: Bank rate, repo rate
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Correct Answer: Marginal Standing Facility, reverse repo rate
Solution : The correct option is Marginal Standing Facility, reverse repo rate.
The marginal standing facility (MSF) and the reverse repo rate determine the corridor for the daily movement in the weighted average call money rate. The MSF is the upper bound of the corridor, while the reverse repo rate serves as the lower bound. The central bank adjusts these rates to influence short-term interest rates and maintain stability in the financial system. The corridor helps in managing liquidity in the money market and achieving the monetary policy objectives of the central bank.
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Question : The interest rate at which the Reserve Bank of India provides overnight liquidity to banks is called ________.
Option 1: Reverse repo rate
Option 2: Marginal standing facility rate
Option 3: Repo rate
Option 4: Leverage rate
Question : The rate at which RBI gives short-term loans to commercial banks is called:
Option 1: repo rate
Option 2: reverse repo rate
Option 3: bank rate
Option 4: cash reserve rate
Question : What is the bank rate?
Option 1: The rate at which the Central bank of a country advances loans to other banks in the country.
Option 2: The rate at which banks advance loans to customers.
Option 3: The rate at which banks lend among themselves.
Option 4: The rate at which banks lend to money lenders.
Question : Equilibrium out is determined by:
Option 1: the equality between total variable cost and marginal revenue
Option 2: the equality between Marginal cost and Marginal revenue
Option 3: the equality between Average cost and Average revenue
Option 4: the equality between total cost and total revenue
Question : Rate of interest is determined by
Option 1: The rate of return on the capital invested
Option 2: Central Government
Option 3: Liquidity preference
Option 4: Commercial Banks
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