Multiple choice

Which of the following is not a tool of fiscal policy?

  1. Marginal Standing Facility

  2. Deficit financing

  3. Capital levy

  4. Progressive taxation

  5. Transfer payment
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A Correct answer
Explanation

Marginal Standing Facility (MSF) is a window for banks to borrow from the Reserve Bank of India in an emergency situation, when inter-bank liquidity dries up completely.

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