alleryStart learning →What does a repo operation under LAF do to system liquidity?
AWithdraws liquidity
BInjects liquidity
CLeaves it unchanged
DFreezes all liquidity
Answer & Solution
Correct answer: B. Injects liquidity
In a repo the RBI gives cash to banks, so liquidity enters the system.
Keep practising Money Market
Browse all Money Market questions for CA Foundation, or explore more Business Economics topics.
Related questions
Eurodollar deposits are deposits in US dollars held where?Trading companies often buy bankers' acceptances to pay whom?Federal funds are usually lent on what basis?Accrual instruments are issued at face value and mature at what amount?How does a T-bill investor earn a return?Treasury bills (T-bills) are zero-coupon securities maturing in how long?What does a CD ladder strategy do?A longer CD term usually earns a higher rate, except when which condition applies?