UGC NET COMMERCE June 2019 Q4
0. Which one is NOT true regarding the Market Stabilization Scheme (MSS)?
- A
It absorbs surplus liquidity of enduring nature arising out of large capital flows
- B
It absorbs surplus liquidity through sale of short-dated government securities and treasury bills
- C
Mobilised surplus liquidity is held in the MSS account with the Reserve Bank of India
- D
MSS account liquidity can be used for normal government expenditure of capital nature
- Option : D
- Explanation : Market Stabilization Scheme (MSS): This instrument for monetary management was introduced in 2004. Surplus liquidity of a more enduring nature arising from large capital inflows is absorbed through sale of short-dated government securities and treasury bills. The cash so mobilized is held in a separate governm ent account with the Reserve Bank.
