MSF is the rate at which banks can borrow overnight from RBI.This was introduced in the monetary policy of RBI for the year 2011-2012.
The MSF is pegged 100bps or a % above the repo rate.
Banks can borrow funds through MSF when there is a considerable shortfall of liquidity. This measure has been introduced by RBI to regulate short-term asset liability mismatches more effectively
marginal rate of substitution
Marginal rate of substitution tends to decrease with passage of units consumptions.
Yes. The height of an indifference curve is the marginal rate of substitution.
As a matter of fact, law of diminishing marginal rate of substitution conforms to the law of diminishing marginal utility. According to law of diminishing marginal utility, as a consumer increases the consumption of a good, its marginal utility goes on diminishing. On the contrary, if the consumption of a good decreases, its marginal utility goes on increasing.
In economics, the marginal rate of substitution can be determined by calculating the ratio of the marginal utility of one good to the marginal utility of another good. This ratio represents the rate at which a consumer is willing to trade one good for another while maintaining the same level of satisfaction.
Marginal Standing Facility
LAFMSFLiquidity adjustment facility, this is for short term Marginal standing facility, this is for long term Minimum bidding amount is 5 cr. 1 cr. All clients of RBI are eligible to bid. Only scheduled commercial banks can bid. Bank cannot sell Government security to RBI that is part of bank's SLR quota. bank can sell the Government security from its SLR quota to RBI. Bank can borrow any amount of money as long as it has the securities to sell. Bank can maximum borrow upto 2% of its NDTL. Suppose repo rate is "r%" current rate [29-07-2013] : 7.25%MSF lending rate is always (r+x)%current rate [29-07-2013] : 10.25%
marginal rate of substitution
marginal rate of substitution
Marginal rate of substitution tends to decrease with passage of units consumptions.
Yes. The height of an indifference curve is the marginal rate of substitution.
Open market operation are used by the RBI for long term liquidity adjustment while reverse repo rate (or REPO) are used for short term LAF(liquidity adjustment facility). Now govt. introduced MSF(Marginal standing facility like Treasure Bills) to control short term fluctuation. Repo rate change offers range for Call Money Market, and now repo rates are monitored biweekly basis by RBI.
MSF is the rate at which banks can borrow overnight from RBI.This was introduced in the monetary policy of RBI for the year 2011-2012. The MSF is pegged 100bps or a % above the repo rate. Banks can borrow funds through MSF when there is a considerable shortfall of liquidity. This measure has been introduced by RBI to regulate short-term asset liability mismatches more effectively
Marginal Rate
As a matter of fact, law of diminishing marginal rate of substitution conforms to the law of diminishing marginal utility. According to law of diminishing marginal utility, as a consumer increases the consumption of a good, its marginal utility goes on diminishing. On the contrary, if the consumption of a good decreases, its marginal utility goes on increasing.
In economics, the marginal rate of substitution can be determined by calculating the ratio of the marginal utility of one good to the marginal utility of another good. This ratio represents the rate at which a consumer is willing to trade one good for another while maintaining the same level of satisfaction.
When the total product is increasing but at a decreasing rate, the marginal product will also decrease.