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      Question

      What facility allows for the daily infusion and absorption of liquidity by utilizing government securities as collateral?

      A Liquidity Adjustment Facility (LAF) Correct Answer Incorrect Answer
      B Marginal Standing Facility Correct Answer Incorrect Answer
      C Reverse Repo Rate Correct Answer Incorrect Answer
      D Repo Rate Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      LAF consists of daily infusion or absorption of liquidity on a purchase basis, through Repo and Reverse Repo rates basis respectively.

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