Question

Which of the following will increase the money supply?

• A. Fall in repo rate
• B. Purchase of securities in open market
• C. Decrease in cash reserve ratio
• D. All of these

Answer 1

The correct option is D All of these

Fall in repo rate means bank get loans for less interest from RBI then banks give loans to there customers,as this will increase buying capacity of people since banks will give loan to all liberal people.

Purchase of open market securities means buying govt securities.

Decrease in CRR means commercial banks have to maintain less reserve which is manadatory by RBI

Thus these all factors increses money supply.