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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

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marginal rate of substitution


What is Definition marginal rate of substitution?

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Law of diminishing marginal rate of substitution?

Marginal rate of substitution tends to decrease with passage of units consumptions.


Is the height of an indifference curve the marginal rate of substitution?

Yes. The height of an indifference curve is the marginal rate of substitution.


What is the difference between open market operation and reverse repo rate?

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Why does the marginal rate of substitution diminish?

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.


How can one determine the marginal rate of substitution in economics?

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.


What happens to the marginal product when the total product is increasing but at a decreasing rate?

When the total product is increasing but at a decreasing rate, the marginal product will also decrease.