Liquidity Adjustment Facility MCQ — 1 Practice Questions with Answers

Liquidity Adjustment Facility is a Indian Economy topic in the RAS/RPSC syllabus. This page gathers exam-style Liquidity Adjustment Facility multiple-choice questions with correct answers and explanations, so aspirants can test recall and revise frequently examined concepts.

Practice 1 Liquidity Adjustment Facility multiple-choice questions with detailed answers and explanations. Ideal for RAS/RPSC exam preparation.

1 Questions Indian Economy

Reviewed by: Aspirant Academy Editorial Team

Q1. Consider the following statements regarding the RBI's Liquidity Adjustment Facility (LAF) corridor: 1. The Standing Deposit Facility (SDF) acts as the floor of the LAF corridor. 2. The Marginal Standing Facility (MSF) acts as the ceiling of the LAF corridor. Which of the statements given above is/are correct?

A 1 only

B 2 only

C Neither 1 nor 2

D Both 1 and 2 Correct

Explanation

Both statements are correct. In the RBI's revised liquidity management framework, the Standing Deposit Facility (SDF) is the floor of the LAF corridor and the Marginal Standing Facility (MSF) is the ceiling, with the policy repo rate at the mid-point.

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Liquidity Adjustment Facility falls under the Indian Economy section of the RAS/RPSC syllabus. It is a frequently tested area and regular practice with these MCQs will strengthen your preparation.

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