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Question
What can be done to increase the money supply in the economy?
What can be done to increase the money supply in the economy?
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Solution
The correct option is C Provide more loans
Money supply refers to the money that people have in hand and in their bank accounts. It plays a significant role in controlling the credit in an economy, which is an important function of the Reserve Bank of India. Money supply can be increased in the economy by providing more loans to people at lower interest rates. Lower interest rates for loans would encourage people to avail loans as they would have to pay less money for their loans.
Money supply refers to the money that people have in hand and in their bank accounts. It plays a significant role in controlling the credit in an economy, which is an important function of the Reserve Bank of India. Money supply can be increased in the economy by providing more loans to people at lower interest rates. Lower interest rates for loans would encourage people to avail loans as they would have to pay less money for their loans.
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