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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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